History/Profile,

Overview:

Dawson Geophysical, Inc is a leading provider of onshore seismic data in 48 states of US. Their business consists of seismic data acquisition and processing to form the overall picture of earth’s subsurface. This method involves the recording of reflected acoustic and sonic waves. They introduce acoustic energy into the ground with vibration machines and then record the reflection of this energy with their special recording devices. These devices are called geophones. Usually there is placed 6 devices on the ground which are connected with each other and form a channel. The company uses both 2-D and 3-D seismic techniques. The latter method helps to get the more precise images and improved quality data. The generated data is mostly used by oil and gas companies. The data helps them to identify the most efficient location and decrease oil and natural gas finding costs.

Strategy:

1. Attracting experienced and skilled personnel

2. Maintaining the focus on their domestic operations.

3. Continuing to operate in a conservative financial discipline.

4. Upgrading their capabilities to advance is geophysical technologies

5. Acquiring new equipment to expand the recording capacity channel.

Competition:

The acquiring and processing seismic data for oil and gas companies is a highly competitive industry in United States. Among Dawson’s competitors are relatively small and large companies with substantially greater financial resources available. Here is the list of competitors: CGG Veritas Petroleum Geo-Services ASA Geokinetics Inc Global Geophysical Services, Tidelands Geophysical Company

The Financials,

Income Statement,

The Bullish:

Let’s start with the revenue growth. Since 2003 fiscal year we can see 49.51% year-by-year increase until 2007 fiscal year, from 51.59 millions of dollars to 257.76 millions. Moreover, there wasn’t a single yearly decrease during the FY03-FY07 period. As for the gross profit its growth was better during the same period of time. The gross profit CAGR (Compounded Annual Growth Rate) growth equals to 87.79% per year and there wasn’t a single decrease also, like in revenues growth. In 2003 fiscal year operation income was negative (-1.38 million dollars). Nevertheless, during FY04-FY07 period operation income grew strongly at a CAGR of 89.21% per year. In 2003 net income was also negative (-900000$) and performed a strong growth during the following years until 2007 fiscal year. The net income growth CAGR is 46.6% which is not so exciting like operation income, revenue and gross profit growth. However there wasn’t a single decline in net income. What’s the most important thing I like in Dawson’s income statement is consistency in gross margins growth.