GlobeNewswire Inc | May 13, 2021 08:30AM EDT

May 13, 2021

-- Total revenue declined to $5.1 million from $9.4 million in 2020 first quarter -- Net loss improved to $2.2 million from $2.8 million -- Adjusted EBITDA declined to $940,000 loss from $503,000 loss

LONGMONT, Colo., May 13, 2021 (GLOBE NEWSWIRE) -- Enservco Corporation (NYSE American: ENSV), a diversified national provider of specialized 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, 2021.

The increase in commodity prices during the first quarter did not translate into increased completions activity as quickly as we might have expected. That, combined with continued impact of the pandemic and periods of unseasonably warm weather, resulted in lower than anticipated revenue in the first quarter, said Rich Murphy, Executive Chairman. On a brighter note, we anticipate improved results during our upcoming heating season based on current higher commodity prices compared to last year, increased requests for proposals and recent new customer wins, and successful implementation of 10-15% price increases in certain markets. In addition, we continued to grow our partnerships with two large oilfield services companies in the first quarter and we expect these relationships to further expand next season.

We are focusing more resources on our year-round hot oiling service business, where we see good potential for expansion and have commenced a $400,000 capex project for our hot oiling fleet that will conclude in September, Murphy added. Our Jourdanton yard in south Texas remains busy and has our largest concentration of hot oilers with 19 units. We are now working to establish a presence in east Texas to serve customers in the Haynesville Shale and other fields in the Ark-La-Tex region. We have two hot oilers scheduled to commence full-time operations this month with the potential to add up to a dozen units by year-end. In the meantime, we are augmenting our traditional services with non-oilfield services such as equipment and dirt hauling, which contributed profitable revenue in the first quarter thats expected to continue in the second and third quarters.

We are moving forward with a much-improved balance sheet since September 2020 following the addition of $12.5 million in new equity, the elimination of approximately $22 million in debt and a right-sizing program that took approximately $4.2 million in annual expense our of our business. We believe we are well positioned to proceed with our growth initiatives and weather the ongoing pandemic impact, said Marjorie Hargrave, President and CFO.

First Quarter Results

Total revenue in the first quarter ended March 31, 2021, declined to $5.1 million from $9.4 million in the same quarter last year.

Production services revenue was $1.8 million in the first quarter from $3.2 million in the same quarter last year. Production services included hot oiling, which declined to $1.8 million from $2.9 million, and acidizing, which declined to $45,000 from $270,000.

Production services generated a segment loss of $123,000 in the first quarter as compared to a segment loss of $292,000 in the same quarter last year.

Completion services revenue, primarily consisting of frac water heating revenue, in the first quarter was $3.3 million compared to $6.2 million in the same quarter last year.

Completion services generated a segment profit of $157,000, down from a segment profit of $1.2 million in the same quarter last year.

Total operating expenses in the first quarter declined 36% year over year to $7.5 million from $11.6 million due primarily to lower costs of providing completion services. Sales, general and administrative expense decreased 43% in the first quarter to $1.0 million from $1.8 million, reflecting the impact of cost-cutting measures implemented in 2020.

The Company reported an operating loss of $2.4 million in the first quarter compared to an operating loss of $2.3 million in the same quarter last year. Net loss in the first quarter was $2.2 million, or $0.24 per diluted share, a 23% reduction from the net loss of $2.8 million, or $0.77 per diluted share, in the same quarter last year. The improved bottom line was primarily attributable to lower interest expense in the first quarter of 2021 due to a significant reduction in the Companys total debt and cessation of the recording of interest expense on the Companys credit facility after the debt restructuring in the third quarter of 2020.

Adjusted EBITDA in the first quarter was a negative $940,000 compared to a negative $503,000 in the same quarter last year.

Enservco used $2.6 million in cash from operations in the first quarter, up from $1.0 million in cash used in operations in the same quarter last year. Cash provided by financing activities increased to $4.9 million from $0.5 million in the same quarter last year due primarily to the public offering in February 2021, partially offset by the $3.0 million paydown of the Companys credit facility.

Conference Call Information

Management will hold a conference call today to discuss these results. The call will begin at 8:30 a.m. Mountain Time (10:30 a.m. Eastern) and will be accessible by dialing 888-506-0062 (973-528-0011 for international callers). No passcode is necessary. A telephonic replay will be available through May 20, 2021, by calling 877-481-4010 (919-882-2331 for international callers) and entering the Conference ID #41082. 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 until June 12, 2021. The webcast also is available at the following link: https://www.webcaster4.com/Webcast/Page/2228/41082.

About EnservcoThrough its various operating subsidiaries, Enservco provides a range of oilfield services, including hot oiling, acidizing, frac water heating, and related services. The Company has a broad geographic footprint covering seven major domestic oil and gas basins and serves customers in Colorado, 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 Enservcos 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 StatementsThis 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 Enservcos annual report on Form 10-K for the year ended December 31, 2020, and subsequently filed documents with the SEC. Forward looking statements in this news release that are subject to risk include expectations for improved financial results, expansion of partnerships and hot oiling operations, success of the east Texas expansion, and continuation of non-oilfield services work. 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.

Contact:

Jay PfeifferPfeiffer High Investor Relations, Inc.Phone: 303-880-9000jay@pfeifferhigh.com

Marjorie HargravePresident and CFOEnservco Corporationmhargrave@enservco.com

ENSERVCO CORPORATIONCondensed Consolidated Balance Sheets(In thousands) March 31, December 31,ASSETS 2021 2020 Current Assets Cash and cash equivalents $ 3,700 $ 1,467 Accounts receivable, net 3,172 1,733 Prepaid expenses and other current assets 971 858 Inventories 334 295 Assets for held for sale 527 527 Total current assets $ 8,704 $ 4,880 Property and equipment, net 19,035 20,317 Goodwill 546 546 Intangible assets, net 563 617 Right-of-use asset - finance, net 110 129 Right-of-use asset - operating, net 2,708 2,918 Other assets 421 423 Non-current assets of discontinued operations 347 353 TOTAL ASSETS $ 32,434 $ 30,183 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current Liabilities Accounts payable and accrued liabilities $ 1,315 $ 1,931 Senior revolving credit facility, relatedparty (including future interest payable of 1,318 1,593 $735 and $892, respectively - see Note 6)Lease liability - finance, current 66 65 Lease liability - operating, current 847 854 Current portion of long-term debt 89 100 Current liabilities of discontinued 33 31 operationsTotal current liabilities $ 3,668 $ 4,574 Long-Term Liabilities Senior revolving credit facility, relatedparty (including future interest payable of $ 13,850 $ 17,485 $433 and $485, respectively - see Note 6)Subordinated debt, related party (Note 2) - 1,180 Long-term debt, less current portion 2,038 2,052 Lease liability - finance, less current 38 55 portionLease liability - operating, less current 1,986 2,185 portionOther liabilies 43 88 Long-term liabilities of discontinued - 9 operationsTotal long-term liabilities $ 17,955 $ 23,054 Total liabilities $ 21,623 $ 27,628 Commitments and Contingencies (Note 8) Stockholders' Equity (Deficit) Preferred stock, $.005 par value, 10,000,000shares authorized, no shares issued or - - outstandingCommon stock. $.005 par value, 100,000,000shares authorized 11,439,630 and 6,307,868shares issued as of March 31, 2021 andDecember 31, 2020, respectively 6,907shares of treasury stock as of March 31, 2021 57 32 and December 31, 2020, respectively and11,432,723 and 6,300,961 shares outstandingas of March 31, 2021 and December 31, 2020,respectivelyAdditional paid-in capital 40,456 30,052 Accumulated deficit (29,702 ) (27,529 )Total stockholders' equity (deficit) $ 10,811 $ 2,555 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,434 $ 30,183 (DEFICIT)

ENSERVCO CORPORATIONCONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(in thousands) For the Three Months Ended March 31, 2021 2020 Revenues Production services $ 1,844 $ 3,202 Completion and other services 3,299 6,184 5,143 9,386 Expenses Production services 1,967 3,494 Completion and other services 3,142 4,971 Sales, general and administrative expenses 1,005 1,762 Loss on disposal of equipment 51 15 Depreciation and amortization 1,336 1,396 Total operating expenses 7,501 11,638 Loss from operations (2,358 ) (2,252 ) Other (expense) income Interest expense (33 ) (641 )Other income 226 20 Total other income (expense) 193 (621 ) Loss from continuing operations before income tax (2,165 ) (2,873 )benefit (expense)Income tax expense - - Loss from continuing operations $ (2,165 ) $ (2,873 )Loss from discontinued operations (Note 5) (8 ) 36 Net loss $ (2,173 ) $ (2,837 ) Loss from continuing operations per common share - $ (0.24 ) $ (0.78 )basic and diluted(Loss) income from discontinued operations per common - $ 0.01 share - basic and dilutedNet loss per share - basic and diluted $ (0.24 ) $ (0.77 ) Weighted average number of common shares outstanding 9,187 3,701 ?basic and diluted

ENSERVCO CORPORATIONCONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, 2021 2020 OPERATING ACTIVITIES Net (loss) income $ (2,173 ) $ (2,837 )Net (loss) income from discontinued operations (8 ) 36 Net (loss) income from continuing operations (2,165 ) (2,873 )Adjustments to reconcile net (loss) income to net cashused in operating activities Depreciation and amortization 1,336 1,396 Loss on disposal of property and equipment 51 15 Board compensation issued in equity 311 - Stock-based compensation 24 39 Amortization of debt issuance costs and 8 47 discountProvision for bad debt expense 38 300 Changes in operating assets and liabilities Accounts receivable (1,476 ) 429 Inventories (39 ) 39 Prepaid expense and other current assets (113 ) 333 Amortization of operating lease assets 210 230 Other assets 2 15 Accounts payable and accrued liabilities (556 ) (869 )Operating lease liabilities (206 ) (204 )Other liabilities (45 ) - Net cash used in operating activities - (2,620 ) (1,103 )continuing operationsNet cash (used in) provided by operating (2 ) 134 activities - discontinued operationsNet cash used in operating activities (2,622 ) (969 ) INVESTING ACTIVITIES Purchases of property and equipment (45 ) (164 )Proceeds from disposal of property and 13 - equipmentNet cash used in investing activities - (32 ) (164 )continuing operationsNet cash provided by investing activities - - 178 discontinued operationsNet cash (used in) provided by investing (32 ) 14 activities FINANCING ACTIVITIES Gross proceeds from stock issuance 9,660 - Stock issuance costs and registration fees (815 ) - Term loan repayment (3,000 ) - Net line of credit (repayments) borrowings (701 ) 595 TDR accrued future interest payments (209 ) - Repayment of long-term debt (25 ) (23 )Payments of finance leases (22 ) (30 )Net cash provided by financing activities - 4,888 542 continuing operationsNet cash used in financing activities - (1 ) (33 )discontinued operationsNet cash provided by financing activities 4,887 509 Net Increase (Decrease) in Cash and Cash 2,233 (446 )EquivalentsCash and Cash Equivalents, beginning of period 1,467 663 Cash and Cash Equivalents, end of period $ 3,700 $ 217 Supplemental Cash Flow Information: Cash paid for interest $ 220 $ 537 Supplemental Disclosure of Non-cash Investing and Financing Activities:Non-cash conversion of subordinated debt and $ 1,312 $ - accrued interest to common stockNon-cash common stock issuances for board fees 311 -

ENSERVCO CORPORATION AND SUBSIDIARIESCalculation of Adjusted EBITDA * For the Three Months Ended March 31, 2021 2020 Net loss $ (2,173 ) $ (2,837 )Add back Interest expense (including discontinued 33 642 operations)Depreciation and amortization (including 1,343 1,403 discontinued operations)EBITDA (797 ) (792 )Add back (deduct) Stock-based compensation 24 39 Severance and transition costs 7 - Loss (gain) on disposal of equipment 51 (39 )(including discontinued operations)Other expense (226 ) 279 EBITDA related to discontinued operations 1 10 Adjusted EBITDA $ (940 ) $ (503 ) Use of Non-GAAP Financial Measures: Non-GAAP results are presented only as asupplement to the financial statements and for use within management?sdiscussion and analysis based on U.S. generally accepted accounting principles(GAAP). The non-GAAP financial information is provided to enhance the reader'sunderstanding of the Company?s financial performance, but no non-GAAP measureshould be considered in isolation or as a substitute for financial measurescalculated in accordance with GAAP. Reconciliations of the most directlycomparable GAAP measures to non-GAAP measures are provided herein. EBITDA is defined as net (loss) income (earnings), before interest expense,income taxes, and depreciation and amortization. Adjusted EBITDA excludesstock-based compensation from EBITDA and, when appropriate, other items thatmanagement does not utilize in assessing the Company?s ongoing operatingperformance as set forth in the next paragraph. None of these non-GAAPfinancial measures are recognized terms under GAAP and do not purport to be analternative to net income as an indicator of operating performance or anyother GAAP measure. All of the items included in the reconciliation from net income to EBITDA andfrom EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g.,depreciation, amortization of purchased intangibles, stock-based compensation,impairment losses, etc.) or (ii) items that management does not consider to beuseful in assessing the Company?s ongoing operating performance (e.g., incometaxes, gain or losseson sale of equipment, severance and transition costs,gain on settlement, expenses to consolidate former Adler facilities, patentlitigation and defense costs,other expense (income), EBITDA related todiscontinued operations, etc.). In the case of the non-cash items, managementbelieves that investors can better assess the company?s operating performanceif the measures are presented without such items because, unlike cashexpenses, these adjustments do not affect the Company?s ability to generatefree cash flow or invest in its business. We use, and we believe investors benefit from the presentation of, EBITDA andAdjusted EBITDA in evaluating our operating performance because it provides usand our investors with an additional tool to compare our operating performanceon a consistent basis by removing the impact of certain items that managementbelieves do not directly reflect our core operations. We believe that EBITDAis useful to investors and other external users of our financial statements inevaluating our operating performance because EBITDA is widely used byinvestors to measure a company?s operating performance without regard to itemssuch as interest expense, taxes, and depreciation and amortization, which canvary substantially from company to company depending upon accounting methodsand book value of assets, capital structure and the method by which assetswere acquired. Additionally, ourfixed charge coverage ratiocovenantassociated with our Loan and Security Agreementwith East West Bankrequire the use of Adjusted EBITDAin specific calculations. Because not all companies use identical calculations, the Company?spresentation of non-GAAP financial measures may not be comparable to othersimilarly titled measures of other companies. However, these measures canstill be useful in evaluating the Company?s performance against its peercompanies because management believes the measures provide users with valuableinsight into key components of GAAP financial disclosures.