DAWSON GEOPHYSICAL CO

Previous wording

Statements other than statements of historical fact included in this Form 10-Q that relate to forecasts, estimates or other expectations regarding future events, including without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” regarding technological advancements and our financial position, business strategy, and plans and objectives of our management for future operations, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our 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; 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 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 effects of the COVID-19 pandemic and certain efforts to mitigate the spread

Current wording

“Exchange Act”). When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our 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; the impact of general economic, industry, market or political conditions, including tariffs; 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 and markets; changes in economic conditions; 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 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 effects of the COVID-19 pandemic, 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 unrest in the Middle East, 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 Securities and Exchange Commission (the “SEC”). The cautionary statements made in this Form 10-Q should be read as applying to all related forward-looking statements wherever they appear in this Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company’s Annu…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We began the quarter with one crew operating in the United States, and had two small channel crews operating later in the quarter. We currently have one crew operating and a second large channel crew scheduled to deploy in mid-November, which will utilize the majority of our channels in the United States. Our seasonal operations in Canada resumed in October, and we expect increased revenues and profitability from Canada through the first quarter of 2025.

Current wording

We began the quarter with one crew operating in the United States, and had two small crews operating later in the quarter. We are currently operating one large channel crew, and we expect to have that crew highly utilized through the remainder of the year in the United States. We expect our revenue to increase in the United States in the second quarter due to our strong backlog.

Previous wording

We are currently testing new single node channels in the field, and we expect to invest in increasing our channel count through the purchase of new equipment in the near future. We believe that investing in new single node channels will improve our revenue and margins due to improved crew efficiency with the lighter weight equipment.

Current wording

We continue to test new single node channels in the field, and we expect to invest in increasing our channel count through the purchase of new equipment in the near future. We believe that investing in new single node channels will improve our revenue and margins due to improved crew efficiency with the lighter weight equipment.

Previous wording

U.S. Fee Revenues. Acquisition revenues for the third quarter of 2024 decreased 52% to $4.7 million compared to $9.7 million for the same period of 2023. The decrease was primarily due to a decrease in crew utilization. Acquisition revenues for the first nine months of 2024 decreased 4.6% to $31.3 million compared to $32.8 million for the same period of 2023. The decrease was primarily due to a decrease in crew utilization.

Current wording

U.S. Fee Revenues. Acquisition revenues for the first quarter of 2025 decreased 85% to $2.7 million compared to $18.3 million for the same period of 2024. The decrease was primarily due to a decrease in crew utilization.

Previous wording

*Total Revenues.*Revenues for the third quarter of 2024 were $14.4 million compared to $23.0 million for the same period of 2023. Total revenues included a decrease of $3.5 million in reimbursable revenues. Revenues for the first nine months of 2024 were $58.5 million compared to $72.6 million for the same period of 2023. Total revenues included a decrease of $10.9 million in reimbursable revenues.

Current wording

*Total Revenues.*Revenues for the first quarter of 2025 were $16.1 million compared to $31.6 million for the same period of 2024. Total revenues included a decrease of $4.0 million in reimbursable revenues.

Previous wording

*U.S. Fee Operating Expenses.*Acquisition expenses for the third quarter of 2024 decreased 43% to $5.7 million compared to $10.1 million for the same period of 2023. The decrease was primarily due to an overall decrease in crew production and utilization during the period. Acquisition expenses for the first nine months of 2024 decreased 9% to $26.8 million from $29.4 million for the same period of 2023. The increase was primarily due to an decrease in crew utilization.

Current wording

*U.S. Fee Operating Expenses.*Acquisition expenses for the first quarter of 2025 decreased 64% to $4.6 million compared to $12.9 million for the same period of 2024. The decrease was primarily due to an overall decrease in crew production and utilization during the period. US fee operating expenses include a component of recurring fixed costs related to primarily to payroll and insurance whether or not our crews are operating.

Previous wording

*Canadian Fee Operating Expenses.*Acquisition expenses for the third quarter of 2024 decreased 5% to $0.8 million compared to $0.9 million for the same period of 2023. The decrease was primarily due to an overall decrease in crew production and utilization during the period. Acquisition expenses for the first nine months of 2024 decreased 34% to $5.8 million from $8.8 million for the same period of 2023. The decrease was primarily due to decreased crew utilization.

Current wording

*Canadian Fee Operating Expenses.*Acquisition expenses for the first quarter of 2025 increased 50% to $6.3 million compared to $4.2 million for the same period of 2024. The increase was primarily due to an overall increase in crew production and utilization during the period.

Previous wording

General and Administrative Expenses. During the third quarter of 2024 and 2023, general and administrative expenses remained equal totaling $2.5 million for both periods. During the first nine months of 2024 general and administrative expenses decreased 26% to $6.6 million compared to $9.0 million for the same period of 2023. The decrease was primarily due to our focus on cost reduction initiatives, a decrease in retained legal counsel and a reduction in salary expenses.

Current wording

General and Administrative Expenses. General and administrative expenses decreased slightly during the first quarter of 2025 compared to the corresponding quarter in 2024, to $2.0 million from $2.2 million. The decrease was primarily due to our focus on cost reduction initiatives.

Previous wording

Depreciation and Amortization Expense. Depreciation and amortization expenses for the third quarter and first nine months of 2024 totaled $1.4 million and $4.4 million, respectively, compared to $2.0 million and $6.8 million for the same periods of 2023. Depreciation expenses decreased in 2024 compared to 2023 as a result of multiple years of reduced capital expenditures.

Current wording

Depreciation and Amortization Expense. Depreciation and amortization expenses for the first quarter of 2025 and 2024 totaled $1.3 million and $1.6 million, respectively. Depreciation expenses decreased in 2025 compared to 2024 as a result of multiple years of reduced capital expenditures.

Previous wording

Total Operating Costs. Total operating costs for the third quarter of 2024 were $20.2 million, representing a 30% decrease from the same period of 2023. The operating costs for the first nine months of 2024 were $62.4 million, representing a 25% decrease from the same period of 2023. The decrease in operating costs for the third quarter and first nine months of 2024 compared to 2023 was primarily due to the factors described above.

Current wording

Total Operating Costs. Total operating costs for the first quarter of 2025 were $15.0 million, representing a 63% decrease from the same period of 2024. The decrease in operating costs for the first quarter of 2025 compared to 2024 was primarily due to the factors described above.

Previous wording

Income Taxes. Income tax benefit for the third quarter of 2024 was $35,000 and income tax expense for the first nine months of 2024 was $36,000, respectively, compared to income tax expense of $3,000 and income tax benefit of $96,000 for the same periods of 2023. These amounts represent effective tax rates of 0.6 and -1.1% for the third quarter and first nine months of 2024, respectively, compared to -0.1% and 0.9% for the same periods of 2023. The Company’s nominal effective tax rate for the periods above was due to the presence of net operating loss carryovers and adjustments to the valuation allowance on deferred tax assets.

Current wording

Income Taxes. Income tax expense for the first quarter of 2025 and 2024 was $3,000 and $202,000, respectively. These amounts represent effective tax rates of 0.3 and 3.3% for the first quarter of 2025 and 2024, respectively. The Company’s nominal effective tax rate for the periods above was due to the presence of net operating loss carryovers and adjustments to the valuation allowance on deferred tax assets.

Previous wording

We define Adjusted EBITDA as our 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:

Current wording

We define Adjusted EBITDA as net income (loss) plus interest expense, interest income, income taxes, depreciation and amortization expense and other unusual items. Our management uses Adjusted EBITDA as a supplemental financial measure to assess:

Previous wording

We also understand that such data are used by investors to assess our 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, our 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.

Current wording

performance presented in accordance with GAAP. When assessing our operating performance, 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, our Adjusted EBITDA may not be comparable to Adjusted EBITDA or similarly titled measures utilized by other companies since other companies may not calculate Adjusted EBITDA in the same manner as us. Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes: interest, taxes, depreciation and amortization, and other unusual items. For the three months ended March 31, 2025, and 2024, there were no unusual items and therefore Adjusted EBITDA and EBITDA were equal.

Previous wording

The reconciliation of our Adjusted EBITDA to net income (loss) and to net cash provided by (used in) operating activities, which are the most directly comparable GAAP financial measures, are provided in the following tables (in thousands):

Current wording

The reconciliation of our Adjusted EBITDA to our Net (loss) income and net cash provided by (used in), which are the most directly comparable GAAP financial measures, are provided in the following tables (in thousands):

Previous wording

Cash Flows. Net cash provided by operating activities was $3.6 million for the nine months ended September 30, 2024, compared to $2.5 million for the same period of 2023. This increase was primarily due to various changes in the balances of our operating assets and liabilities.

Current wording

Cash Flows. Net cash provided by operating activities was $1.8 million for the three months ended March 31, 2025, compared to $1.9 million for the same period of 2024. This variance was primarily due to various changes in the balances of our operating assets and liabilities.

Previous wording

Net cash used in investing activities was $0.9 million and $3.5 million for the nine months ended September 30, 2024, and 2023, respectively. The decrease in cash used in investing activities between periods of $2.5 million was primarily due to a decrease in cash capital expenditures to $1.6 million for the first nine months of 2024 compared to capital expenditures of $2.6 million for the same period of 2023. Additionally, in connection with the Breckenridge asset acquisition in 2023 we acquired $1.0 million of short-term investments.

Current wording

Net cash provided by investing activities was $185,000 for the three months ended March 31, 2025. Net cash used in investing activities was $0.5 million for the three months ended March 31, 2024. The decrease in cash used in investing activities between periods of $0.7 million was primarily due to a decrease in cash capital expenditures to $0 from $0.7 million for the first three months of 2025 and 2024, respectively.

Previous wording

Net cash used in financing activities was $11.4 million for the nine months ended September 30, 2024, and was primarily comprised of dividends paid of $9.9 million, principal payments of $0.9 million and $0.5 million under our notes payable and finance leases, respectively. Net cash used in financing activities was $3.7 million for the nine months ended September 30, 2023, and was primarily comprised of principal payments of $0.5 million and $0.2 million under our notes payable and finance leases, respectively. Additionally, in connection with the Breckenridge asset acquisition we had cash distributions of $3.1 million.

Current wording

Net cash used in financing activities was $0.6 million for the three months ended March 31, 2025, and was primarily comprised of principal payments of $0.4 million and $0.2 million under our notes payable and finance leases, respectively. Net cash used in financing activities was $0.6 million for the three months ended March 31, 2024, and was primarily comprised of principal payments of $0.4 million and $0.2 million under our notes payable and finance leases, respectively.

Previous wording

Capital Expenditures. The Board of Directors approved an initial 2024 capital budget in the amount of $2.5 million for capital expenditures, which was limited to necessary maintenance capital requirements and incremental recording channel replacement or increase. As of September 30, 2024, the Board of Directors increased this budget to $6.0 million to invest in additional single node channels. For the nine months ended September 30, 2024, we spent $2.5 million on capital expenditures, primarily for rolling stock and maintenance capital requirements. Historically, we have funded most of our capital expenditures through cash flow from operations, cash reserves, equipment term loans and finance leases.

Current wording

Capital Expenditures. The Board of Directors approved a 2025 capital budget in the amount of $6.0 million for capital expenditures. Historically, we have funded most of our capital expenditures through cash flow from operations, cash reserves, equipment term loans and finance leases.

Previous wording

Dominion Letters of Credit. As of September 30, 2024, we have no outstanding letters of credit. Our previously issued letter of credit in the amount of $265,000 was not renewed on August 9, 2024.

Current wording

Dominion Letters of Credit. As of March 31, 2025, we have no outstanding letters of credit.

Previous wording

As of September 30, 2024, we have no outstanding short-term notes payable. As of December 31, 2023, we had one outstanding short-term note payable to a finance company for various insurance premiums totaling $910,000.

Current wording

As of March 31, 2025, we have three outstanding short-term notes payable to finance companies for various insurance premiums totaling $1.5 million. As of December 31, 2024, we had one outstanding short-term note payable to a finance company for various insurance premiums totaling $168,000.

Previous wording

In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases. Our Condensed Consolidated Balance Sheet as of September 30, 2024 and December 31, 2023, include finance leases of $2.2 million and $1.8 million, respectively.

Current wording

In addition, we lease certain seismic recording equipment and vehicles under leases classified as finance leases. Our Condensed Consolidated Balance Sheet as of March 31, 2025 and December 31, 2024, include finance leases of $2.2 million and $2.4 million, respectively.

Previous wording

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 seeks to improve transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disclosures. The updated guidance is effective for us on January 1, 2025. We do not expect the adoption of ASU 2023-09 to have a material impact on our financial statements and disclosures.

Current wording

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures(“ASU 2023-09”). ASU 2023-09 seeks to improve transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disclosures. The updated guidance is effective for annual periods after January 1, 2025, and will be reflected through additional disclosures in our 2025 10-K.