Dawson Geophysical Company says growth can continue, weather permitting
After reporting record results for the third quarter ended June 30, Dawson Geophysical Company (Nasdaq: DWSN) executives said on a conference call this morning that the growth is sustainable. CEO Stephen Jumper, however, cautioned that weather downtime and gaining land access permits on a timely basis are the main factors that could hamper growth.
“We believe the market to be very strong. We believe we’re performing very well on behalf of our clients,” Jumper said during the call. “We think we’re adding value to our product and our services.”
The company, which provides seismic data services to companies searching for oil and gas, said earnings were aided by the addition of three seismic data acquisition crews within the last year, increased crew productivity, improved pricing and more favorable contracts.
Jumper said he feels “very good” that the positive trends are sustainable going forward.
Before the opening bell, Dawson Geophysical announced third-quarter revenue of $68.6 million, a 65% increase from $41.5 million a year earlier, and higher than the $56.9 million expected by Wall Street. The company recorded net income of $7.5 million, or $0.99 per share, topping average analyst expectations of $0.78 per share. In the year-earlier period the company posted a profit of $4.2 million, or $0.56 per share.
Also this morning, Dawson Geophysical announced it is increasing its fiscal 2007 capital budget to $55 million, from the previously planned $38.1 million.
The company’s third-quarter results were hindered by inclement weather conditions in early April, late June and part of July, Jumper said. In a press release, the company stated that demand for its data acquisition and processing services continues at an all-time high.
Several analysts questioned Jumper about the company’s third-quarter operating margin of 18%. In 2006, the company’s third-quarter operating margin was about 16%.
“On a pricing and opportunity basis, we think there is opportunity for margin growth,” Jumper said. However, he cautioned, “We don’t know what the weather’s going to do. Weather is always going to have some impact on margin in some way. That’s the ‘X-factor’ as I’ve heard it called.”
In midday trading, shares of the small-cap company are up $10.40, or 19.04%, at $65.01. Over the last 52 weeks, shares have fluctuated between $25.70 and $65.25.
