DAWSON GEOPHYSICAL CO Q3 FY2021 earnings call

• Operational activity: Third quarter 2021 had one seismic data acquisition crew in Lower 48 with extended low utilization, idled from early September to mid-October. Canadian season began earlier, expecting 2 crews in back half of fourth quarter 2021 through end of winter season.
• Balance sheet: As of September 30, 2021, cash and short-term investments were $41.6 million, current ratio 8.8:1, working capital $39.4 million. Accounts receivable decreased from $7.3 million at Dec 31, 2020 to $325,000 at Sep 30, 2021.
• Pending transaction: Entered into definitive merger agreement with Wilks Brothers, LLC; subsidiary of Wilks commenced tender offer to acquire all outstanding common shares for $2.34 per share in cash, open until November 30, 2021 subject to extensions. Board unanimously approved merger agreement as in best interest of shareholders.

For the third quarter ended September 30, 2021, Dawson Geophysical Company reported revenues of $1.9 million, a net loss of $7.9 million or $0.33 loss per common share, and EBITDA of negative $4.7 million. For the 9 months ended September 30, 2021, revenues were $13.9 million, a net loss of $22.1 million or $0.94 loss per common share, and EBITDA of negative $12.2 million. Activity levels were depressed with one seismic data acquisition crew operating in the Lower 48 with low utilization, and bid activity at historically low levels with limited visibility into 2022. Prices for services softened due to lack of demand in both Canada and the Lower 48.

Today's call states the company will not provide any guidance.

• Low bid activity and limited visibility into 2022 in Lower 48.
• Softened service prices due to lack of demand for onshore seismic data acquisition projects in Canada and Lower 48.
• Challenges in making significant capital investments necessary to grow revenue stream due to ongoing cash burn and low demand.

Q: Bruce Berger asked about rightsizing plans and why a rightsizing plan would fail to stop cash losses.

A: Stephen C. Jumper responded that the company has been attempting to rightsize for an extended period, reducing employee count, costs, etc., but cutting further would impact ability to respond to demand, and current cash burn is hard to significantly impact with receivables low. Also mentioned limited visibility, softened prices, and long-term cash burn and capital investment challenges.

Q: Bruce Berger followed up on guidance, and Stephen C. Jumper stated no guidance would be given, but mentioned some short-term positives in Q4 and Q1 in Canada with limited visibility and softened prices in projects.