DENVER, CO--(Marketwired - May 12, 2016) - ENSERVCO Corporation (NYSE MKT: ENSV)

  • Company continues to generate positive EBITDA and cash flow from operations despite industry downturn and impact of El Nino on frac water heating services.

  • Maintains strong balance sheet; recent equipment appraisal affirms collateral position and borrowing availability under senior credit facility

  • Expansion into Eagle Ford continues as Company grows hot oil service line and wins first acidizing business with major E&P customer

  • Recently granted dirt hauling contract for $2.6 million will help offset normal seasonal decline in revenue during second and third quarters

ENSERVCO Corporation (NYSE MKT: ENSV), a diversified national provider of well-site services to the domestic onshore conventional and unconventional oil and gas industries, today reported financial results for its first quarter ended March 31, 2016.

"As we anticipated on our last earnings call, our first quarter performance continued to reflect the effects of reduced activity among E&Ps and a continuing El Nino warming trend which impacted our heating operations," said Rick Kasch, chairman and CEO. "Despite these challenges, we achieved positive adjusted EBITDA and cash flow from operations due to a combination of aggressive cost-cutting measures, redeployment of assets to more active basins, and strong relationships with existing customers.

"Our expansion into the Eagle Ford Basin in Texas continues to gain momentum," Kasch added. "In addition to steadily growing our hot oiling presence there with several E&P customers, we are now bidding on other opportunities that have the potential to test our overall hot oiling capacity if they come to fruition. We also won our first acidizing business in Eagle Ford with a major E&P. Following an initial project that significantly enhanced production at one well, the program has been expanded to additional wells resulting in us having to deploy a total of four acidizing units to the area.

"In another development subsequent to the end of the quarter, we were awarded a $2.6 million contract in Colorado to haul dirt for a construction project that will be monetized over the second and third quarters of this year. In addition to adding a new revenue stream with a good margin in what are traditionally our slower, off-season quarters, this contract enables us to utilize equipment that would otherwise be idle and to retain key personnel.

"We continue our focus on maintaining a strong balance sheet with solid debt to equity and working capital ratios. We are in compliance with terms of our credit facility and expect that to continue through year-end. In addition, a recently completed equipment appraisal reaffirmed our collateral position and actually resulted in a slight increase in our net borrowing availability under our senior credit facility. Overall, we are pleased with our performance under challenging circumstances, particularly our ability to generate new business opportunities and expand operations in this hypercompetitive environment.

"In addition, as previously disclosed, we added two new service lines in the first quarter -- water transfer and HydroFLOW® bacteria and scale treatment -- via asset acquisitions at what we believe were very favorable prices relative to the original cost of the equipment. Early marketing efforts for these lines have been challenging due to the industry downturn, but their addition to our services portfolio enhances our ability to offer customers bundled solutions in order to reduce costs and simplify the procurement process. As a result, we believe we are well positioned not only to weather the downturn but to capitalize on growth opportunities when activity begins to pick up."

First Quarter Results
 Total first quarter revenue declined 57% year over year to $8.3 million from $19.1 million primarily due to an overall decline in drilling and completion activities stemming from low commodity prices and lower demand for heating services attributable to unseasonably warm weather from lingering effects of El Nino during the quarter. Revenue was also impacted by approximately $950,000 due to a year over year decline in propane prices.

By service line, the $10.8 million decline in total revenue included an $8.6 million, or 68%, decline in frac water heating; a $0.8 million, or 41%, decline in water hauling; and a $1.4 million, or 32%, decline in the Company's well maintenance services of hot oiling and acidizing. Hot oiling revenue declined $1.1 million year over year in spite of a $651,000, or 302%, increase in hot oiling revenue from the expansion into the Eagle Ford basin, where the Company continues to add personnel and equipment in support of growing customer relationships.

Gross profit in the first quarter was $1.5 million versus a gross profit of $7.9 million in the same quarter last year. The year over year decline in gross margin -- to 19% from 41% -- was attributable to lower revenue in the Company's higher margin frac water heating services and to the impact of fixed costs relative to lower revenue.

General and administrative expenses declined 16%, or $194,000, year over year and costs associated with patent litigation and defense declined 89%, or $303,000. These improvements were partially offset by a $425,000 increase in depreciation and amortization expense related to the larger fleet size and acquisition of water transfer assets in January 2016.

The Company reported a net loss of $1.1 million, or $0.03 per diluted share, versus net income of $2.9 million, or $0.07 per diluted share, in the same quarter last year. The impact of additional depreciation expense on EPS was $0.01 in the first quarter.

Adjusted EBITDA in the first quarter was $661,000 versus $6.7 million in the same quarter last year - a reflection of the significant decline in high margin frac water heating revenue.

ENSERVCO generated $2.9 million in cash from operations in the first quarter of 2016, down from $6.2 million in the same quarter last year. The Company has a long-term debt to equity ratio to 1.4:1 as compared to 1.2:1 at 2015 year-end. The Company closed the quarter with working capital of $4.2 million and a current ratio of 2.5:1.

Conference Call Information
 Management will hold a conference call today to discuss these results. The call will begin at 11:00 a.m. Mountain Time (1:00 p.m. Eastern) and will be accessible by dialing 877-407-8031 (201-689-8031 for international callers). No passcode is necessary. A telephonic replay will be available through May 19, 2016, by calling 877-660-6853 (201-612-7415 for international callers) and entering the Conference ID #13635680. 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 for 90 days. The webcast also is available at the following link: http://www.investorcalendar.com/IC/CEPage.asp?ID=174948

About ENSERVCO
 Through its various operating subsidiaries, ENSERVCO provides a wide range of oilfield services, including hot oiling, acidizing, frac water heating, water transfer, bacteria and scaling treatment, water hauling and oilfield support equipment rental. The Company has a broad geographic footprint covering seven major domestic oil and gas fields and serves customers in Colorado, Kansas, 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, 2015, and subsequently filed documents. 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.

   
ENSERVCO CORPORATION  
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)  
           
 For the Three Months Ended  
 March 31,  
 2016    2015  
               
Revenues $ 8,307,059     $ 19,139,497  
               
Cost of Revenues   6,770,085       11,264,286  
               
Gross Profit   1,536,974       7,875,211  
               
Operating Expenses              
  General and administrative expenses   1,026,575       1,220,353  
  Patent litigation and defense costs   36,166       339,017  
  Depreciation and amortization   1,747,972       1,322,934  
    Total operating expenses   2,810,713       2,882,304  
               
Income (Loss) from Operations   (1,273,739 )     4,992,907  
               
Other Income (Expense)              
  Interest expense   (372,668 )     (253,210 )
  Other income   1,996       6,900  
    Total other expense   (370,672 )     (246,310 )
               
Income (Loss) Before Tax Expense   (1,644,411 )     4,746,597  
Income Tax Benefit (Expense)   568,842       (1,854,717 )
Net Income (loss) $ (1,075,569 )   $ 2,891,880  
               
Other Comprehensive Income (Loss)   -       -  
               
Comprehensive Income (Loss) $ (1,075,569 )   $ 2,891,880  
               
Earnings (Loss) per Common Share - Basic $ (0.03 )   $ 0.08  
               
Earnings (Loss) per Common Share - Diluted $ (0.03 )   $ 0.07  
               
Basic weighted average number of common shares outstanding   38,129,660       37,350,668  
Add: Dilutive shares assuming exercise of options and warrants   -       1,859,527  
Diluted weighted average number of common shares outstanding   38,129,660       39,210,195  
               
               
               
ENSERVCO CORPORATION  
Calculation of Adjusted EBITDA  
               
 For the Three Months Ended  
 March 31,  
 2016    2015  
               
Adjusted EBITDA              
  Income (Loss) $ (1,075,569 )   $ 2,891,880  
  Add Back (Deduct)              
    Interest Expense   372,668       253,210  
    Provision for income taxes (benefit) expense   (568,842 )     1,854,717  
    Depreciation and amortization   1,747,972       1,322,934  
  EBITDA   476,229       6,322,741  
  Add Back (Deduct)              
      Stock-based compensation   150,433       91,060  
      Patent Litigation and defense costs   36,166       339,017  
      Interest and other income   (1,996 )     (6,900 )
  Adjusted EBITDA $ 660,832     $ 6,745,918  
               
               
               
 
ENSERVCO CORPORATION
Condensed Consolidated Balance Sheets
       
 March 31,  December 31,
ASSETS2016  2015
  (Unaudited)    
Current Assets          
  Cash and cash equivalents $ 1,588,779   $ 804,737
  Accounts receivable, net   3,765,056     7,037,419
  Prepaid expenses and other current assets   1,062,465     1,072,479
  Inventories   295,978     308,297
  Income tax receivable   237,055     222,447
    Total current assets   6,949,333     9,445,379
           
Property and Equipment, net   39,251,365     36,494,661
Goodwill   301,087     301,087
Other Assets   180,730     180,730
           
TOTAL ASSETS $ 46,682,515   $ 46,421,857
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities          
  Accounts payable and accrued liabilities $ 2,401,258   $ 3,039,859
  Current portion of long-term debt   387,751     314,263
    Total current liabilities   2,789,009     3,354,122
           
Long-Term Liabilities          
  Senior revolving credit facility, net of unamortized deferred loan costs of $547,299 and $532,870, respectively   22,600,423     20,173,371
  Long-term debt, less current portion   481,488     590,505
  Deferred income taxes, net   3,848,201     4,417,043
    Total long-term liabilities   26,930,112     25,180,919
    Total Liabilities   29,719,121     28,535,041
           
Commitments and Contingencies          
           
Stockholders' Equity          
  Preferred stock, $.005 par value, 10,000,000 shares authorized, no shares issued or outstanding   -     -
  Common stock, $.005 par value, 100,000,000 shares authorized, 38,233,760 and 38,230,729 shares issued, respectively; 103,600 shares of treasury stock; and 38,130,160 and 38,127,129 shares outstanding, respectively   190,650     190,634
  Additional paid-in capital   14,004,694     13,852,563
  Accumulated earnings   2,768,050     3,843,619
    Total stockholders' equity   16,963,394     17,886,816
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 46,682,515   $ 46,421,857
           
           
           
ENSERVCO CORPORATION  
Condensed Consolidated Statement of Cash Flows  
(Unaudited)  
           
 For the Three Months Ended  
 March 31,  
 2016    2015  
OPERATING ACTIVITIES              
  Net income (loss) $ (1,075,569 )   $ 2,891,880  
  Adjustments to reconcile net income (loss) to net cash provided by operating activities              
    Depreciation and amortization   1,747,972       1,322,934  
    Deferred income taxes   (568,842 )     1,661,682  
    Stock-based compensation   150,433       91,060  
    Stock issued for services   1,714       -  
    Amortization of debt issuance costs   35,571       28,892  
    Bad debt expense   39,159       4,255  
  Changes in operating assets and liabilities              
    Accounts receivable   3,233,204       (531,120 )
    Inventories   12,319       46,244  
    Prepaid expense and other current assets   10,014       385,643  
    Income taxes receivable   (14,608 )     -  
    Accounts payable and accrued liabilities   (638,601 )     214,192  
    Income taxes payable   -       56,205  
      Net cash provided by operating activities   2,932,766       6,171,867  
               
INVESTING ACTIVITIES              
  Purchases of property and equipment   (4,504,676 )     (2,352,379 )
    Net cash used in by investing activities   (4,504,676 )     (2,352,379 )
               
FINANCING ACTIVITIES              
  Net credit facility borrowings (payments)   2,441,481       (4,093,140 )
  Repayment of long-term debt   (35,529 )     (130,525 )
  Payment of debt issuance costs   (50,000 )     -  
  Proceeds from exercise of warrants   -       77,100  
  Proceeds from exercise of options   -       14,634  
  Excess tax benefits from exercise of options and warrants   -       136,831  
    Net cash provided by (used in) financing activities   2,355,952       (3,995,100 )
               
Net Increase (Decrease) in Cash and Cash Equivalents   784,042       (175,612 )
               
Cash and Cash Equivalents, Beginning of Period   804,737       954,058  
               
Cash and Cash Equivalents, End of Period $ 1,588,779     $ 778,446  
               
               
Supplemental cash flow information consists of the following:              
    Cash paid for interest $ 259,936     $ 221,594  
    Cash paid for taxes $ 1,400     $ -  
               
Supplemental Disclosure of Non-cash Investing and Financing Activities:              
    Cashless exercise of stock options and warrants $ -     $ 2,968