DAWSON GEOPHYSICAL CO Q1 FY2020 earnings call

• Preliminary first quarter financial results: Revenues were $39 million in 2020 Q1 vs $51.2 million in 2019 Q1; net income was $993,000 in 2020 Q1 vs net loss of $137,000 in 2019 Q1; EBITDA was $5.8 million in 2020 Q1 vs $6 million in 2019 Q1.
• Balance sheet: As of March 31, 2020, debt including obligations under financing leases was approximately $3.1 million, cash and short-term investments were $30.2 million, current ratio was 3.3 to 1 and working capital was approximately $50.7 million.
• Operational details: In 2020 Q1, operated three large channel count crews in US, Canada's winter season ended with equipment redeployed to US; majority of projects for multi-client companies in US.
• Cost details: Cost of services in 2020 Q1 was $29 million, down 29% from 2019 Q1; general and administrative expenses were $3.7 million, down 19%; depreciation and amortization expense was $4.9 million, down 19%.
• COVID-19 measures: Reduced non-field level support staff, senior executives' base salaries reduced by ~20%, many employees took temporary salary deductions; instituted CDC guidelines like social distancing, enhanced work from home, etc.; reopened business locations following CDC guidelines at crew level with various safety measures.

For the quarter ended March 31, 2020, Dawson Geophysical Company reported revenues of $39 million compared to $51.2 million for the same quarter in 2019. Net income for the first quarter of 2020 was $993,000 or $0.04 per common share compared to a net loss of $137,000 or $0.01 loss per common share in the first quarter of 2019. EBITDA for the quarter ended March 31, 2020 was $5.8 million compared to $6 million in the same quarter of 2019. During the first quarter of 2020, the company operated three large channel count crews in the United States, primarily in the Permian Basin and a peak of three crews in Canada. The winter season in Canada concluded at the end of the first quarter of 2020 with equipment station in Canada redeployed to the US. The majority of the company’s projects are on behalf of multi-client companies in the US.

• Anticipates continued operation of two large channel count crews through the second quarter and into the third quarter of 2020.
• Second quarter will be somewhat negatively impacted as redeploying a third smaller channel count crew.
• Visibility beyond early part of third quarter is limited.
• Company has a strong balance sheet and scalable business structure to adjust operations and expenses.

• Oil price drop: Dissolution of OPEC quotas and COVID-19 led to oil price plummet, causing exploration companies to cut capital budgets by 30%-50%, reducing demand for services.
• Project delays: Reduction in requests for proposals, several large projects postponed.
• Uncertainty: Overall oil and gas industry facing unprecedented headwinds with limited visibility beyond early part of third quarter.

Q: Any problem in confidence in collecting receivables?

A: Steve Jumper said as of today, no significant issues or great concern, receivables are in good shape.

Q: How has COVID-19 affected crew costs and ability to get crews down?

A: Steve Jumper said COVID-19 has not had significant financial impact on crew costs, employees have responded well, and proper procedures and resources have been provided to continue operations.

Q: Thoughts on technology change motivating additional business?

A: Steve Jumper said technology change has driven additional shooting in areas like the Permian Basin in recent years, though currently in a different situation.