OKLAHOMA CITY, May 14, 2020 /PRNewswire/ -- Energy and Environmental Services, Inc. (OTC: EESE) today announced its unaudited financial results for the first quarter ended March 31, 2020.
"Despite the COVID-19 pandemic and a 67% drop in oil prices during the first quarter of 2020, we're pleased with a 115% increase in revenue this quarter versus the corresponding quarter last year," stated Leon Joyce, CEO. "As encouraging as this was, the impact of a shutdown economy and over supply of crude oil has greatly slowed the oilfield services industry. We will feel the impact and are aggressively reducing expenses to bring them in line with expected decreases in revenue. We are focused on controlling what we can control. Shifting our manufacturing to our farm and ranch segment and household and institutional chemicals is one way we can offset some of the loss in revenue from oilfield chemicals. Our trucking company is also bringing in revenue from outside of the oil industry. We are fortunate to have some diversified income streams," added Joyce.
First Quarter 2020 Financial Highlights
Capital Resources and Outlook
EES's primary sources of capital during the first quarter 2020 were its cash reserves, a net increase in commercial borrowing of $402,800, and a net increase of $646,200 in accounts payable. Much of the borrowing increase was attributable to debt assumptions in the Celex acquisition. These sources were partially offset by increases in accounts receivable of $148,300 and inventory of $462,700. Despite recent losses, EES has worked to maintain a solid cash position and was able to realize $88,000 in cash provided by operations for the first quarter 2020, compared to cash used in operations of $(295,000) for the first quarter 2019. It invested $249,200 into property and equipment during the first quarter 2020 and $325,00 in the acquisition of Celex. With working capital of $4,017,800 at March 31, 2020, EES believes it has sufficient capacity to meet its cash needs and will continue to focus on increasing EBITDA.
EES cannot predict the full impacts of the COVID-19 pandemic or the significant disruption and volatility within the oil and natural gas industry, but the impacts will have negative effects on its business. While oil and gas-related sales have historically composed about 90% of its revenues, EES has operating segments that are unrelated to oil and gas and it intends to shift resources into these areas. Enduro-Bond industrial coatings provide an affordable solution to corrosion control versus the high cost of stainless steel. Enduro-Bond markets these products within and without the oil and gas industry. A newly installed 35-foot oven increases capacity and lowers costs. EcoZyme Systems has developed and is marketing two products that are gaining attention: an OMRI-certified fertilizer for organic farming and a probiotic feed supplement for livestock. EES's laboratory expertise and facilities are providing non-oil and gas services, which will contribute significant revenues. EES's trucks are hauling for commercial customers beyond the oilfield services sector. In the first quarter 2020, 73.6% of trucking revenue came from non-oil and gas customers. While EES cannot predict when the oil and gas industry will recover, it believes its action plan for 2020 will carry the company through. EES has a solid cash position, well-recognized oilfield chemical products and an experienced management team. It also has diversified product lines that will generate revenues despite the slumping economy.
Established in 1991, Energy and Environmental Services, Inc. (OTC: EESE) owns and operates factories and warehouses in Oklahoma and Texas where it manufactures, blends, and packages custom liquid, solid, and dry powder chemical products for the oil & gas, agricultural, and protective coatings industries. EES has also expanded to develop innovative products and applications for enzyme system technologies and livestock feed supplements.
Safe Harbor for Forward-Looking Statements
Certain statements contained in this press release are forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause Energy & Environmental Services actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Except as required by law, Energy & Environmental Services expressly disclaims any intent or obligation to update any forward-looking statements.
SOURCE Energy and Environmental Services, Inc.