Enservco reports eighth straight quarter of year-over-year revenue growth
LONGMONT – Enservco Corp. (NYSE American: ENSV), which provides specialized well-site services to the domestic oil and gas industries, has recorded its eighth consecutive quarter of higher year-over-year revenue.
In an earnings report issued Tuesday for the first quarter of 2023, which ended March 31, the Longmont-based company said revenue gained 4% year over year, to $8.9 million from $8.6 million, fueled by increased customer demand coupled with continued growth in Enservco’s East Texas hot oiling operations and price increases in certain markets.
In addition, said executive chairman Rich Murphy in a prepared statement, “our gross profit improved by 56% year over year and adjusted EBITDA more than tripled. We anticipate improved profit metrics based on expected non-recurrence of certain legal and stock-based compensation expenses combined with company-wide cost reductions.”
“EBITDA” refers to earnings (net income or loss) plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes stock-based compensation and, when appropriate, other items that management does not utilize in assessing Enservco’s operating performance.
“We are focused on three primary initiatives: improving cost efficiencies, further de-levering our balance sheet and continuing to grow and diversify our revenue,” Murphy said. “We are implementing expense reductions across our business, with an emphasis on lowering corporate overhead, including headcount and public company costs. Having already reduced our peak long-term debt of $36 million to $7.2 million, we anticipate further debt reduction in 2023 and are working on a refinancing plan designed to lower debt service and enhance cash flows.”
Murphy said the company expects “to continue driving organic growth while exploring opportunities to add accretive revenue streams” through mergers, acquisitions and possibly adding new, internally developed service offerings.
Gross profit increased to $2 million from $1.3 million in the same quarter last year. Net loss in the first quarter was $1 million, or 7 cents per basic and diluted share, versus net income of $3.1 million, or 27 cents per basic and diluted share in the same quarter last year. That loss included approximately $300,000 in legal costs, a large portion of which are expected to be non-recurring, as well as $100,000 for a one-time restricted stock issuance.
The year-ago first quarter included a $4.3 million gain on extinguishment of debt related to the company’s first quarter 2022 debt refinancing.
Enservco said in the report that it had continued to reduce long-term debt in the first quarter, which declined to $7.2 million from $8.4 million at the end of 2022 and from a high of $36 million in 2019 when the company began its debt-reduction program.
Enservco closed the first quarter with stockholders’ equity of $4.3 million, up from $1.2 million on Dec. 31.
This month, the New York Stock Exchange informed Enservco that it was noncompliant with NYSE’s requirements for stockholders’ equity. Per the exchange’s continued listing standards, the company is required to have stockholders’ equity in excess of $6 million, a threshold it said Tuesday that it expects to achieve assuming its shareholders approve Proxy Proposal 2 at the upcoming annual meeting on June 13. That proposal would clear the way for its largest shareholder, Cross River Partners, to convert up to $2.5 million of convertible debt to equity. The company said such conversion would not only help Enservco meet the exchange’s stockholders’ equity requirement but also would support its ongoing initiative to reduce long-term debt to enhance cash flows and increase financial flexibility.
The stockholder equity issue is not the first stock-related problem Enservco has faced in recent years. In early 2022, the company, which has traded under $1 since February, decided to delay filing its quarterly disclosures with the U.S. Securities and Exchange Commission to restate financial statements on three quarterly reports for 2021 to adjust for its utilization of certain deferred tax liabilities that year.
Enservco stock closed at 37 cents a share on Wednesday.