DAWSON GEOPHYSICAL REPORTS SECOND QUARTER 2024 RESULTS

MIDLAND, Texas, Aug. 12, 2024 /PRNewswire/ -- Dawson Geophysical Company (NASDAQ: DWSN) (the "Company") today reported unaudited financial results for its second quarter ended June 30, 2024.

Management Comment

Tony Clark, Dawson's President and CEO, commented, "We began the quarter with two crews operating in the United States, and dropped to one crew in late May. We reacted quickly to the softness in our calendar and reduced headcount to one crew to conserve our cash flows during this time. We have strategically adjusted our bidding and marketing process to improve our utilization throughout the year going forward. We expect to ramp up our activity later in the third quarter of this year improving our utilization, revenues and operating cash flows. We are continually evaluating our performance as an organization and believe that we are positioned to capitalize on the opportunities in our industry."

Second Quarter and Year-to-Date Results

For the second quarter ended June 30, 2024, the Company reported revenues of $12.5 million, a decrease of 38% compared to $20.2 million for the comparable quarter ended June 30, 2023. Revenue included reimbursable revenue of $4.2 million and $9.3 million for the quarters ended June 30, 2024, and June 30, 2023, respectively.

For the second quarter ended June 30, 2024, we incurred a net loss of $3.5 million or $0.12 per common share compared to a net loss of $4.4 million or $0.18 per common share for the quarter ended June 30, 2023. During the quarter, we generated negative Adjusted EBITDA of $2.3 million in the quarter ended June 30, 2024, compared to negative Adjusted EBITDA of $2.5 million in the quarter ended June 30, 2023.

Year to date, we have generated net income of $2.3 million or $0.07 per common share compared to a net loss of $4.8 million or $0.19 per common share. Our cost reduction initiatives continue to improve our profitability with a 37% reduction in general and administrative expenses year-to-date compared to the comparable period of 2023.

Operations Update

The Company started the quarter with two crews in the United States, and dropped to one crew in late May. Our Canadian operations were seasonally halted in April, but we expect them to resume operating in the fourth quarter later this year. We have improved our backlog and expect to have two crews deployed later in the third quarter, and expect to have our current equipment fully deployed throughout the end of the second quarter of 2025.

We periodically evaluate all of our assets and are looking for opportunities to divest certain under-utilized assets to improve our return on capital.

Special Cash Dividend and Liquidity

As previously reported, the Company's Board of Directors declared a special cash dividend on the Company's common stock of $0.32 per share, which was paid on May 6, 2024, to stockholders of record as of the close of business on April 22, 2024. The aggregate payment was approximately $9.9 million.

For the six months ended June 30, 2024, we generated $7.8 million of cash from our operations, and as of June 30, 2024, the Company had cash of $11.2 million and positive working capital of $9 million.

About Dawson

Dawson Geophysical Company is a leading provider of North American onshore seismic data acquisition services with operations throughout the continental United States and Canada. Dawson acquires and processes 2-D, 3-D and multi-component seismic data for its clients, which range from major oil and gas companies to independent oil and gas operators, as well as providers of multi-client data libraries. Dawson also provides Carbon Capture Utilization and Storage ("CCUS") seismic monitoring, which continues to grow and be an integral part of its business. Dawson has acquired several CCUS base surveys and plan to acquire more in the future.

Non-GAAP Financial Measures

In an effort to provide investors with additional information regarding the Company's preliminary and unaudited results as determined by generally accepted accounting principles ("GAAP"), the Company has included in this press release information about the Company's Adjusted EBITDA, a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission. The Company defines Adjusted EBITDA net income (loss), before (i) interest expense, net, (ii) income tax expense or benefit, (iii) depreciation, depletion and amortization and (iv) other unusual or non-recurring charges, such as severance expenses. Our management uses Adjusted EBITDA as a supplemental financial measure to assess:

the financial performance of its assets without regard to financing methods, capital structures, taxes or historical cost basis;
its liquidity and operating performance over time in relation to other companies that own similar assets and that the Company believes calculate Adjusted EBITDA in a similar manner; and
the ability of the Company's assets to generate cash sufficient for the Company to pay potential interest costs.

The Company also understands that such data is used by investors to assess its performance. However, the terms EBITDA and Adjusted EBITDA are not defined under GAAP, and neither EBITDA nor Adjusted EBITDA is a measure of operating income, operating performance or liquidity presented in accordance with GAAP. When assessing our operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for net income (loss), cash flow from operating activities or other cash flow data calculated in accordance with GAAP. In addition, the Company's EBITDA and Adjusted EBITDA may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or Adjusted EBITDA in the same manner as us. Further, the results presented by EBITDA or Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes: interest, taxes, and depreciation and amortization, and other unusual or non-recurring charges, such as severance expenses. A reconciliation of the Company's Adjusted EBITDA to its net loss is presented in the table following the text of this press release.

Forward-Looking Statements

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company cautions that statements in this press release which are forward-looking and which provide other than historical information involve risks and uncertainties that may materially affect the Company's actual results of operations. Forward-looking statements generally relate to future events or the Company's future financial or operating performance and may be identified by words such as "may," "should," "expect," "intend," "will," "estimate," "anticipate," "believe," "predict," or similar words. Such forward-looking statements are based on the beliefs of management as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors. These factors include, but are not limited to, our status as a controlled public company, which exempts us from certain corporate governance requirements; the limited market for our common stock, which could result in the delisting of the common stock from Nasdaq; the impact of general economic, industry, market or political conditions; dependence upon energy industry spending; changes in exploration and production spending by our customers and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of our customers, particularly during extended periods of low prices for crude oil and natural gas; the volatility of oil and natural gas prices; changes in economic conditions; the severity and duration of the COVID-19 pandemic, related economic repercussions and the resulting impact on demand for oil and gas; surplus in the supply of oil and the ability of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+ to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; the potential for contract delays; reductions or cancellations of service contracts; limited number of customers; credit risk related to our customers; reduced utilization; high fixed costs of operations and high capital requirements; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees and remote work arrangements; industry competition; external factors affecting the Company's crews such as weather interruptions and inability to obtain land access rights of way; whether the Company enters into turnkey or day rate contracts; crew productivity; the availability of capital resources; disruptions in the global economy, including export controls and financial and economic sanctions imposed on certain industry sectors and parties as a result of the developments in Ukraine and related activities, and whether or not a future transaction or other action occurs that causes the Company to be delisted from Nasdaq and no longer be required to make filings with the SEC. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company's Annual Report on Form 10-K that was filed with the SEC on April 1, 2024. The Company disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise.

DAWSON GEOPHYSICAL COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited and amounts in thousands, except share and per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Operating revenues:
Fee Revenue	$	8,326	$	10,881	$	35,064	$	33,154
Reimbursable Revenue		4,186		9,338		9,032		16,473
		12,512		20,219		44,096		49,627
Operating costs:
Operating expenses
Fee operating expenses		8,499		10,568		25,995		27,215
Reimbursable operating expenses		4,186		9,338		9,032		16,473
		12,685		19,906		35,027		43,688
General and administrative		2,171		2,977		4,082		6,476
Severance expense		86		—		86		—
Depreciation and amortization		1,406		2,113		2,995		4,813
		16,348		24,996		42,190		54,977

(Loss) income from operations		(3,836)		(4,777)		1,906		(5,350)

Other income (expense):
Interest income		105		136		218		244
Interest expense		(39)		(14)		(85)		(31)
Other income (expense), net		93		143		332		195

(Loss) income before income tax		(3,677)		(4,512)		2,371		(4,942)

Current		131		(14)		(71)		(22)
Deferred		—		96		—		121
Income tax benefit (expense)		131		82		(71)		99

Net (loss) income		(3,546)		(4,430)		2,300		(4,843)

Other comprehensive (loss) income:
Net unrealized (loss) income on foreign exchange rate translation		(110)		249		(270)		243

Comprehensive (loss) income	$	(3,656)	$	(4,181)	$	2,030	$	(4,600)

Basic (loss) income per share of common stock	$	(0.12)	$	(0.18)	$	0.07	$	(0.19)

Diluted (loss) income per share of common stock	$	(0.12)	$	(0.18)	$	0.07	$	(0.19)

Weighted average equivalent common shares outstanding		30,815,443		25,000,564		30,813,886		25,000,564

Weighted average equivalent common shares outstanding - assuming dilution		30,815,443		25,000,564		30,813,886		25,000,564

DAWSON GEOPHYSICAL COMPANY CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share data)

	June 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	11,158	$	10,772
Restricted cash		—		5,000
Short-term investments		265		265
Accounts receivable, net		4,424		12,735
Prepaid expenses and other current assets		7,079		8,654
Total current assets		22,926		37,426

Property and equipment, net		15,082		16,508

Right-of-use assets		2,620		3,208

Intangibles, net		365		377

Total assets	$	40,993	$	57,519

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	3,400	$	3,883
Accrued liabilities:
Payroll costs and other taxes		2,249		3,415
Other		759		709
Deferred revenue		5,709		11,829
Current maturities of notes payable and finance leases		740		1,380
Current maturities of operating lease liabilities		1,064		1,202
Total current liabilities		13,921		22,418

Long-term liabilities:
Notes payable and finance leases, net of current maturities		1,408		1,289
Operating lease liabilities, net of current maturities		1,862		2,363
Deferred tax liabilities, net		15		15
Total long-term liabilities		3,285		3,667

Commitments and contingencies		—		—

Stockholders' equity:
Preferred stock-par value $1.00 per share; 4,000,000 shares authorized, none outstanding		—		—
Common stock-par value $0.01 per share; 35,000,000 shares authorized,
30,906,777 and 30,812,329 shares issued and outstanding at June 30, 2024
and December 31, 2023, respectively		309		308
Additional paid-in capital		156,860		156,678
Accumulated deficit		(131,200)		(123,640)
Accumulated other comprehensive loss, net		(2,182)		(1,912)
Total stockholders' equity		23,787		31,434

Total liabilities and stockholders' equity	$	40,993	$	57,519

Reconciliation of Adjusted EBITDA to Net (Loss) Income (amounts in thousands)

	Three Months Ended June 30,
	2024 US		2024 CA		2024 Consol.		2023 US		2023 CA		2023 Consol.
Net loss	$	(2,468)	$	(1,078)	$	(3,546)	$	(2,794)	$	(1,636)	$	(4,430)
Depreciation and amortization		1,162		244		1,406		1,528		585		2,113
Interest income, net		(60)		(6)		(66)		(81)		(41)		(122)
Income tax benefit		(131)		—		(131)		(82)		—		(82)
EBITDA		(1,497)		(840)		(2,337)		(1,429)		(1,092)		(2,521)
Severance expense		86		—		86		—		—		—
Adjusted EBITDA	$	(1,411)	$	(840)	$	(2,251)	$	(1,429)	$	(1,092)	$	(2,521)

	Six Months Ended June 30,
	2024 US		2024 CA		2024 Consol.		2023 US		2023 CA		2023 Consol.
Net (loss) income	$	(301)	$	2,601	$	2,300	$	(5,254)	$	411	$	(4,843)
Depreciation and amortization		2,467		528		2,995		3,646		1,167		4,813
Interest income, net		(123)		(10)		(133)		(156)		(57)		(213)
Income tax expense (benefit)		71		—		71		(99)		—		(99)
EBITDA		2,114		3,119		5,233		(1,863)		1,521		(342)
Severance expense		86		—		86		—		—		—
Adjusted EBITDA	$	2,200	$	3,119	$	5,319	$	(1,863)	$	1,521	$	(342)

Reconciliation of Adjusted EBITDA to Net Cash Provided By (Used in) Operating Activities (amounts in thousands)

	Three Months Ended June 30,
	2024 US		2024 CA		2024 Consol.		2023 US		2023 CA		2023 Consol.
Net cash provided by (used in) operating activities	$	1,302	$	4,618	$	5,920	$	(868)	$	8,439	$	7,571
Changes in working capital and other items		(2,285)		(5,408)		(7,693)		(340)		(9,485)		(9,825)
Non-cash adjustments to net loss		(514)		(50)		(564)		(221)		(46)		(267)
EBITDA		(1,497)		(840)		(2,337)		(1,429)		(1,092)		(2,521)
Severance expense		86		—		86		—		—		—
Adjusted EBITDA	$	(1,411)	$	(840)	$	(2,251)	$	(1,429)	$	(1,092)	$	(2,521)

	Six Months Ended June 30,
	2024 US		2024 CA		2024 Consol.		2023 US		2023 CA		2023 Consol.
Net cash provided by operating activities	$	3,298	$	4,492	$	7,790	$	1,710	$	4,041	$	5,751
Changes in working capital and other items		(450)		(1,272)		(1,722)		(3,134)		(2,438)		(5,572)
Non-cash adjustments to net (loss) income		(734)		(101)		(835)		(439)		(82)		(521)
EBITDA		2,114		3,119		5,233		(1,863)		1,521		(342)
Severance expense		86		—		86		—		—		—
Adjusted EBITDA	$	2,200	$	3,119	$	5,319	$	(1,863)	$	1,521	$	(342)

Statements of Operations by operating segment for the three and six months ended June 30, 2024, and 2023.

	Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
	USA Operations		Canada Operations		Consolidated		USA Operations		Canada Operations		Consolidated
Operating revenues
Fee revenue	$	8,321	$	5	$	8,326	$	26,608	$	8,456	$	35,064
Reimbursable revenue		4,186		—		4,186		8,995		37		9,032
		12,507		5		12,512		35,603		8,493		44,096

Operating costs:
Fee operating expenses		7,846		653		8,499		21,025		4,970		25,995
Reimbursable operating expenses		4,186		—		4,186		8,995		37		9,032
Operating expenses		12,032		653		12,685		30,020		5,007		35,027
General and administrative		1,998		173		2,171		3,740		342		4,082
Severance expense		86		—		86		86		—		86
Depreciation and amortization		1,162		244		1,406		2,467		528		2,995
		15,278		1,070		16,348		36,313		5,877		42,190

(Loss) income from operations		(2,771)		(1,065)		(3,836)		(710)		2,616		1,906

Other income (expense):
Interest income		89		16		105		188		30		218
Interest expense		(29)		(10)		(39)		(65)		(20)		(85)
Other income (expense)		112		(19)		93		357		(25)		332
(Loss) income before income tax		(2,599)		(1,078)		(3,677)		(230)		2,601		2,371
Income tax benefit (expense)		131		—		131		(71)		—		(71)
Net (loss) income		(2,468)		(1,078)		(3,546)		(301)		2,601		2,300
Other comprehensive (loss) income:
Net unrealized loss on foreign exchange rate translation		—		(110)		(110)		—		(270)		(270)

Comprehensive (loss) income	$	(2,468)	$	(1,188)	$	(3,656)	$	(301)	$	2,331	$	2,030

	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	USA Operations		Canada Operations		Consolidated		USA Operations		Canada Operations		Consolidated
Operating revenues
Fee revenue	$	10,780	$	101	$	10,881	$	23,043	$	10,111	$	33,154
Reimbursable revenue		9,336		2		9,338		15,869		604		16,473
		20,116		103		20,219		38,912		10,715		49,627

Operating costs:
Fee operating expenses		9,643		925		10,568		19,287		7,928		27,215
Reimbursable operating expenses		9,336		2		9,338		15,869		604		16,473
Operating expenses		18,979		927		19,906		35,156		8,532		43,688
General and administrative		2,667		310		2,977		5,769		707		6,476
Severance expense		—		—		—		—		—		—
Depreciation and amortization		1,528		585		2,113		3,646		1,167		4,813
		23,174		1,822		24,996		44,571		10,406		54,977

(Loss) income from operations		(3,058)		(1,719)		(4,777)		(5,659)		309		(5,350)

Other income (expense):
Interest income		91		45		136		178		66		244
Interest expense		(10)		(4)		(14)		(22)		(9)		(31)
Other income (expense)		101		42		143		150		45		195
(Loss) income before income tax		(2,876)		(1,636)		(4,512)		(5,353)		411		(4,942)
Income tax benefit		82		—		82		99		—		99
Net (loss) income		(2,794)		(1,636)		(4,430)		(5,254)		411		(4,843)
Other comprehensive (loss) income:
Net unrealized income on foreign exchange rate translation		—		249		249		—		243		243

Comprehensive (loss) income	$	(2,794)	$	(1,387)	$	(4,181)	$	(5,254)	$	654	$	(4,600)