Dawson Geophysical Company (DWSN, Financial) filed Quarterly Report for the period ended 2009-06-30.
Dawson Geophysical Company acquires and processes 3-D seismic data used in analyzing subsurface geologic conditions for the potential of oil and natural gas accumulation. The Company operates land-based acquisition crews primarily in the western United States. Data processing is performed by geophysicists at Dawson\'s computer center in Midland Texas. Dawson Geophysical Company has a market cap of $231.7 million; its shares were traded at around $29.71 with a P/E ratio of 7 and P/S ratio of 0.9. Dawson Geophysical Company had an annual average earning growth of 87.6% over the past 5 years.
Operating Costs. Operating expenses for the nine months ended June 30, 2009 totaled $151,126,000 as compared to $176,111,000 for the same period of fiscal 2008, a decrease of 14%. Operating expenses for the three months ended June 30, 2009 decreased 23% to $46,374,000 as compared to $60,457,000 for the same period of fiscal 2008. These decreases are primarily due to reductions in field personnel and other expenses of operating the six data acquisition crews taken out of service during the second and third quarters of fiscal 2009. As discussed above, reimbursed expenses have a similar impact on operating costs.
General and administrative expenses were 3% of revenues in the first nine months of fiscal 2009 as compared to 2% of revenues in the same period of 2008. For the quarter ended June 30, 2009, general and administrative expenses were approximately 3% of revenues as compared to 2% for the comparable quarter of fiscal 2008. The increase of general and administrative expenses in the first nine months of fiscal 2009 reflects managements decision to increase our allowance for doubtful accounts. We increased the allowance for doubtful accounts based on managements review of our current past due accounts and client base. During the second quarter, we were made aware that two former clients and one current client with an accounts receivable balance of approximately $1.0 million had filed for reorganization under bankruptcy protection. These facts significantly influenced managements decision to increase our allowance for doubtful accounts during the second quarter. The increase in the allowance for doubtful accounts was partially offset by a release of reserves of approximately $450,000 as a result of a partial payment in connection with the settlement of a previously disputed invoice. During the third quarter of fiscal 2009, management performed an additional review of our current past due accounts. As a result of such review, management made only a nominal adjustment to our allowance for doubtful accounts.
Depreciation for the nine months ended June 30, 2009 totaled $19,651,000 compared to $17,722,000 for the nine months ended June 30, 2008. We recognized $6,521,000 of depreciation expense in the third quarter of fiscal 2009 as compared to $6,317,000 in the comparable quarter of fiscal 2008. The increase in depreciation expense during the fiscal 2009 nine month period is the result of the significant capital expenditures we made during fiscal 2008. Due to market conditions, capital expenditures in fiscal 2009 have been limited to necessary maintenance capital requirements. As a result of these decreases in capital expenditures, depreciation expense is expected to remain relatively unchanged in the final quarter of this fiscal year.
Net cash used in investing activities was $21,310,000 for the nine months ended June 30, 2009 and $47,796,000 for the nine months ended June 30, 2008. In fiscal 2008, the net cash used in investing activities primarily represents capital expenditures made with cash generated from operations. Due to market conditions, our capital expenditures in fiscal 2009 have been limited to necessary maintenance capital requirements rather than investing in additional equipment as in the past few years. In fiscal 2009, cash generated from operations in excess of capital expenditures was used in the acquisition of short-term investments during the quarter ended June 30, 2009. Our short-term investments consist of four U.S. Treasury instruments of approximately $5,000,000 each, with maturity dates ranging from December 2009 to September 2010. In fiscal 2009, we collected proceeds from an insurance claim on our equipment
Our revolving line of credit loan agreement is with Western National Bank. On June 2, 2009, we renewed the existing agreement for a two-year term on substantially the same terms as the previous facility. In addition, based on our assessment of our current needs, we reduced the size of the facility to $20.0 million from $40.0 million. The agreement permits us to borrow, repay and reborrow, from time to time until June 2, 2011, up to $20.0 million based on the borrowing base calculation as defined in the agreement. Our obligations under this agreement are secured by a security interest in our accounts receivable, equipment and related collateral. Interest on the facility accrues at an annual rate equal to either the 30-day London Interbank Offered Rate (LIBOR), plus two and one-quarter percent or the Prime Rate, minus three-quarters percent as we direct monthly, subject to an interest rate floor of 4%. Interest on the outstanding amount under the loan agreement is payable monthly. The loan agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets, mergers and reorganizations. We are also obligated to meet certain financial covenants under the loan agreement, including maintaining specified ratios with respect to cash flow coverage, current assets and liabilities and debt to tangible net worth. We were in compliance with all covenants as of June 30, 2009 and August 7, 2009. We have not utilized the line of credit loan agreement since we paid off the entire outstanding balance of $20.0 million as of September 30, 2008.
Read the The complete Report
Dawson Geophysical Company acquires and processes 3-D seismic data used in analyzing subsurface geologic conditions for the potential of oil and natural gas accumulation. The Company operates land-based acquisition crews primarily in the western United States. Data processing is performed by geophysicists at Dawson\'s computer center in Midland Texas. Dawson Geophysical Company has a market cap of $231.7 million; its shares were traded at around $29.71 with a P/E ratio of 7 and P/S ratio of 0.9. Dawson Geophysical Company had an annual average earning growth of 87.6% over the past 5 years.
Highlight of Business Operations:
Operating Revenues. Our operating revenues for the first nine months of fiscal 2009 decreased 18% to $197,160,000 from $240,530,000 for the first nine months of fiscal 2008. For the three months ended June 30, 2009, operating revenues totaled $52,319,000 as compared to $84,568,000 for the same period of fiscal 2008, a 38% decrease. The decrease in revenues during the third quarter of fiscal 2009 was primarily the result of a reduction in active crew count during the second quarter of fiscal 2009 (four crews) and the third quarter of fiscal 2009 (two crews), a more competitive pricing environment and substantially lower utilization rates for remaining crews. Revenues in the third quarter of fiscal 2009 continued to include relatively high third-party charges related to the use of helicopter support services, specialized survey technologies and dynamite energy sources. The sustained level of these charges is driven by our continued operations in areas with limited access in the Appalachian Basin, Arkansas and Louisiana. We are reimbursed for these expenses by our clients.Operating Costs. Operating expenses for the nine months ended June 30, 2009 totaled $151,126,000 as compared to $176,111,000 for the same period of fiscal 2008, a decrease of 14%. Operating expenses for the three months ended June 30, 2009 decreased 23% to $46,374,000 as compared to $60,457,000 for the same period of fiscal 2008. These decreases are primarily due to reductions in field personnel and other expenses of operating the six data acquisition crews taken out of service during the second and third quarters of fiscal 2009. As discussed above, reimbursed expenses have a similar impact on operating costs.
General and administrative expenses were 3% of revenues in the first nine months of fiscal 2009 as compared to 2% of revenues in the same period of 2008. For the quarter ended June 30, 2009, general and administrative expenses were approximately 3% of revenues as compared to 2% for the comparable quarter of fiscal 2008. The increase of general and administrative expenses in the first nine months of fiscal 2009 reflects managements decision to increase our allowance for doubtful accounts. We increased the allowance for doubtful accounts based on managements review of our current past due accounts and client base. During the second quarter, we were made aware that two former clients and one current client with an accounts receivable balance of approximately $1.0 million had filed for reorganization under bankruptcy protection. These facts significantly influenced managements decision to increase our allowance for doubtful accounts during the second quarter. The increase in the allowance for doubtful accounts was partially offset by a release of reserves of approximately $450,000 as a result of a partial payment in connection with the settlement of a previously disputed invoice. During the third quarter of fiscal 2009, management performed an additional review of our current past due accounts. As a result of such review, management made only a nominal adjustment to our allowance for doubtful accounts.
Depreciation for the nine months ended June 30, 2009 totaled $19,651,000 compared to $17,722,000 for the nine months ended June 30, 2008. We recognized $6,521,000 of depreciation expense in the third quarter of fiscal 2009 as compared to $6,317,000 in the comparable quarter of fiscal 2008. The increase in depreciation expense during the fiscal 2009 nine month period is the result of the significant capital expenditures we made during fiscal 2008. Due to market conditions, capital expenditures in fiscal 2009 have been limited to necessary maintenance capital requirements. As a result of these decreases in capital expenditures, depreciation expense is expected to remain relatively unchanged in the final quarter of this fiscal year.
Net cash used in investing activities was $21,310,000 for the nine months ended June 30, 2009 and $47,796,000 for the nine months ended June 30, 2008. In fiscal 2008, the net cash used in investing activities primarily represents capital expenditures made with cash generated from operations. Due to market conditions, our capital expenditures in fiscal 2009 have been limited to necessary maintenance capital requirements rather than investing in additional equipment as in the past few years. In fiscal 2009, cash generated from operations in excess of capital expenditures was used in the acquisition of short-term investments during the quarter ended June 30, 2009. Our short-term investments consist of four U.S. Treasury instruments of approximately $5,000,000 each, with maturity dates ranging from December 2009 to September 2010. In fiscal 2009, we collected proceeds from an insurance claim on our equipment
Our revolving line of credit loan agreement is with Western National Bank. On June 2, 2009, we renewed the existing agreement for a two-year term on substantially the same terms as the previous facility. In addition, based on our assessment of our current needs, we reduced the size of the facility to $20.0 million from $40.0 million. The agreement permits us to borrow, repay and reborrow, from time to time until June 2, 2011, up to $20.0 million based on the borrowing base calculation as defined in the agreement. Our obligations under this agreement are secured by a security interest in our accounts receivable, equipment and related collateral. Interest on the facility accrues at an annual rate equal to either the 30-day London Interbank Offered Rate (LIBOR), plus two and one-quarter percent or the Prime Rate, minus three-quarters percent as we direct monthly, subject to an interest rate floor of 4%. Interest on the outstanding amount under the loan agreement is payable monthly. The loan agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets, mergers and reorganizations. We are also obligated to meet certain financial covenants under the loan agreement, including maintaining specified ratios with respect to cash flow coverage, current assets and liabilities and debt to tangible net worth. We were in compliance with all covenants as of June 30, 2009 and August 7, 2009. We have not utilized the line of credit loan agreement since we paid off the entire outstanding balance of $20.0 million as of September 30, 2008.
Read the The complete Report
