Press Release Details
Mitcham Industries Reports Fiscal 2011 Second Quarter Results
HUNTSVILLE, Texas, Sept 07, 2010 /PRNewswire via COMTEX News Network/ -- Mitcham Industries, Inc. (Nasdaq: MIND) (the "Company") today announced financial results for its fiscal 2011 second quarter ended July 31, 2010.
Total revenues for the second quarter of fiscal 2011 were $15.2 million compared to $12.7 million in the second quarter of fiscal 2010. The Company reported a net loss of $0.1 million, or $0.01 per share, for the second quarter of fiscal 2011 compared to net loss of $1.0 million, or $0.10 per share, for the second quarter of fiscal 2010. Fiscal 2011 second quarter results include a charge of $0.8 million to the Company's provision for doubtful accounts. Without this charge, the Company's second quarter 2011 net income would have been approximately $0.4 million, or $0.04 per diluted share.
Bill Mitcham, the Company's President and CEO, stated, "We are pleased to report a solid improvement in our core equipment leasing revenues during our fiscal 2011 second quarter, as well as continued strong performance at Seamap and an increase in other equipment sales. Our equipment leasing revenues rose 35% from a year ago, led by across the board strength in our international markets, specifically Southeast Asia, South America and Europe. However, North America remains affected by excess capacity and thus modest demand for seismic rental equipment. Furthermore, as expected, after a seasonally strong first quarter, we experienced little activity in Russia and Canada during the second quarter due to the end of the winter season.
"Our Seamap segment had another solid quarter as we delivered two GunLink 4000 systems and generated a considerable amount of service work. Additionally, our SAP subsidiary showed strong growth, primarily attributable to improved sales of oceanographic equipment to customers in the Pacific Rim.
"We are more optimistic than a few months ago because we are seeing indications of improved demand for seismic services, particularly in international markets. These indications include higher levels of bid activity in our leasing business and higher capacity utilization reported by several seismic contractors. In addition to the strengthening environment we have been experiencing in Southeast Asia, South America and Europe, as well as seasonally in Russia, we are seeing new activity in the Middle East. As announced in June, during the second quarter we added 7,500 channels of Sercel Unite cable-free equipment to our lease pool, enabling us to provide our customers the latest seismic technology and a more complete solution to their land and transition zone acquisition programs.
"While we are optimistic about the balance of the year, our fiscal third quarter year-over-year comparison will be affected by a large job for which we provided a substantial amount of equipment in North America last year. However, we do expect to see the normal seasonal pick-up during the fourth quarter and believe our international operations will continue to strengthen through the balance of the year. With our strong financial position, we believe we are well positioned in the current environment to take advantage of a market turnaround as it occurs."
SECOND QUARTER FISCAL 2011 RESULTS
Total revenues for the fiscal 2011 second quarter increased 20% from the second quarter a year ago to $15.2 million, primarily due to a considerable increase in leasing revenues and higher sales of other equipment. A significant portion of the Company's revenues are usually generated from sources outside the United States, and during the second quarter of fiscal 2011, revenues from international customers accounted for approximately 87% of revenues compared to 78% of revenues during the second quarter of fiscal 2010.
Equipment leasing revenues, excluding equipment sales, rose 35% to $6.5 million compared to $4.8 million in the same period a year ago. This improvement was primarily the result of growth in certain geographic regions, principally Southeast Asia, South America and parts of Europe.
Lease pool equipment sales were $0.2 million compared to $0.1 million in the second quarter of fiscal 2010. Sales of new seismic, hydrographic and oceanographic equipment were $1.3 million compared to $0.7 million in the comparable period a year ago, mainly as a result of growth in SAP's sales of oceanographic equipment in the Pacific Rim.
Seamap equipment sales were $7.2 million compared to $7.0 million in the comparable period a year ago. The Company delivered two GunLink 4000 systems and certain other equipment and generated a considerable amount of ongoing service and repair work in the quarter. In the second quarter a year ago, the Company also had strong equipment sales at Seamap as it delivered two GunLink 4000 systems and two BuoyLink RGPS systems.
Lease pool depreciation in the second quarter was $5.4 million versus $4.4 million in same period last year, a 21% increase. This increase resulted from additions made to the Company's lease pool during fiscal 2010 and the first half of fiscal 2011, including downhole seismic tools, three component digital sensors, cable-free land acquisition equipment and a variety of marine equipment.
Gross profit in the fiscal 2011 second quarter was $4.7 million compared to $3.3 million in the second quarter of fiscal 2010, primarily due to higher leasing revenues despite higher depreciation expense related to lease pool equipment. Gross profit margin for the second quarter of fiscal 2011 was 31% compared to 26% in the same period a year ago.
General and administrative costs for the second quarter of fiscal 2011 were $4.2 million compared to $4.0 million in the second quarter of fiscal 2010 principally due to lower overhead absorption from long-term contracts and higher incentive compensation expense. In the second quarter of fiscal 2011 the Company recorded a charge of $0.8 million to its provision for doubtful accounts. This amount relates almost exclusively to one customer in Eastern Europe. The Company reported an operating loss for the second quarter of fiscal 2011 of $0.6 million compared to operating loss of $1.5 million in the comparable period a year ago. Net loss for the second quarter of fiscal 2011 was $0.1 million, or $0.01 per share, compared to net loss of $1.0 million, or $0.10 per share, for the second quarter of fiscal 2010.
EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter increased 66% to $5.5 million, or 36% of total revenues, from $3.3 million, or 26% of total revenues, in the same period last year. EBITDA, which is not a measure determined in accordance with generally accepted accounting principles ("GAAP"), is defined and reconciled to reported net income, the most comparable GAAP measure, in Note A under the accompanying financial tables.
FIRST HALF FISCAL 2011 RESULTS
Total revenues for the first six months of fiscal 2011 were $31.7 million compared to $23.3 million for the first six months of fiscal 2010. Core equipment leasing revenues were $16.1 million compared to $11.1 million in the same period a year ago. Lease pool equipment sales for the first half of fiscal 2011 were $0.5 million compared to $0.2 million in the first half of fiscal 2010. Sales of new seismic, hydrographic and oceanographic equipment for the first half of fiscal 2011 were $2.1 million compared to $2.3 million in the first half of fiscal 2010. Seamap equipment sales for the first half of fiscal 2011 were $13.0 million compared to $9.6 million in the same period of last year.
Operating income for the first half of fiscal 2011 was $1.9 million compared to an operating loss of $1.5 million in the first half of fiscal 2010. Net income for the first half of 2011 was $2.2 million, or $0.22 per diluted share, compared to net loss of $1.1 million, or $0.11 per share, for the first half of fiscal 2010. EBITDA for the first six months of fiscal 2011 was $12.8 million, or 40% of total revenues, compared to $7.8 million, or 34% of total revenues, in the first six months of fiscal 2010.
CONFERENCE CALL
The Company has scheduled a conference call for Wednesday, September 8, 2010 at 9:00 a.m. Eastern time to discuss its fiscal 2011 second quarter end results. To access the call, please dial (480) 6299692 and ask for the Mitcham Industries call at least 10 minutes prior to the start time. Investors may also listen to the conference live on the Mitcham Industries corporate website, http://www.mitchamindustries.com, by logging on that site and clicking "Investors." A telephonic replay of the conference call will be available through September 22, 2010 and may be accessed by calling (303) 5903030, and using the passcode 4353296#. A web cast archive will also be available at http://www.mitchamindustries.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Donna Washburn at DRG&L at (713) 5296600 or email dmw@drg-e.com.
Mitcham Industries, Inc., a geophysical equipment supplier, offers for lease or sale, new and "experienced" seismic equipment to the oil and gas industry, seismic contractors, environmental agencies, government agencies and universities. Headquartered in Texas, with sales and services offices in Calgary, Canada; Brisbane, Australia; Singapore; Ufa, Bashkortostan, Russia; Lima, Peru; Bogota, Colombia and the United Kingdom and with associates throughout Europe, South America and Asia, Mitcham conducts operations on a global scale and is the largest independent exploration equipment lessor in the industry.
This press release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included herein, including statements regarding the Company's future financial position and results of operations, planned capital expenditures, the Company's business strategy and other plans for future expansion, the future mix of revenues and business, future demand for the Company's services and general conditions in the energy industry in general and seismic service industry, are forward-looking statements. While management believes that these forward-looking statements are reasonable when and as made, actual results may differ materially from such forward-looking statements. Important factors that could cause or contribute to such differences include possible decline in demand for seismic data and our services; the effect of fluctuations in oil and natural gas prices on exploration activity; the effect of uncertainty in financial markets on our customers' and our ability to obtain financing; loss of significant customers; seasonal fluctuations that can adversely affect our business; defaults by customers on amounts due us; possible impairment of long-lived assets; risks associated with our manufacturing operations; inability to obtain funding or to obtain funding under acceptable terms; intellectual property claims by third parties; risks associated with our foreign operation, including foreign currency exchange risk; and other factors that are disclosed in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available from the Company without charge. Readers are cautioned to not place undue reliance on forward-looking statements which speak only as of the date of this release and the Company undertakes no duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise.
- Tables to follow -
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
July 31, January 31,
2010 2010
--------- ------------
ASSETS
Current assets:
Cash and cash equivalents $9,766 $6,130
Restricted cash 670 605
Accounts receivable, net 13,432 15,444
Current portion of contracts
receivable 1,162 2,073
Inventories, net 3,985 5,199
Cost and estimated profit in excess
of billings on uncompleted contract 448 398
Income taxes receivable 1,222 1,438
Deferred tax asset 1,816 1,400
Prepaid expenses and other current
assets 2,218 1,986
Total current assets 34,719 34,673
Seismic equipment lease pool and
property and equipment, net 71,517 66,482
Intangible assets, net 5,586 2,678
Goodwill 4,320 4,320
Prepaid foreign income tax 2,891 2,574
Deferred tax asset 21 88
Long-term portion of contracts
receivable, net 4,081 4,533
Other assets 52 49
--- ---
Total assets $123,187 $115,397
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $11,559 $6,489
Current maturities - long-term debt 729 93
Foreign income taxes payable 1,916 1,345
Deferred revenue 1,018 854
Accrued expenses and other current
liabilities 4,579 2,668
----- -----
Total current liabilities 19,801 11,449
Non-current income taxes payable 3,539 3,258
Long-term debt, net of current
maturities 10,300 15,735
Total liabilities 33,640 30,442
Shareholders' equity:
Preferred stock, $1.00 par value;
1,000 shares authorized; none
issued and outstanding - -
Common stock, $0.01 par value; 20,000
shares authorized; 10,824 and
10,725 shares issued at July 31,
2010 and January 31, 2010, respectively 108 107
Additional paid-in capital 77,091 75,746
Treasury stock, at cost (925 shares
at July 31, 2010 and January 31,
2010) (4,843) (4,843)
Retained earnings 12,495 10,247
Accumulated other comprehensive
income 4,696 3,698
----- -----
Total shareholders' equity 89,547 84,955
------ ------
Total liabilities and shareholders'
equity $123,187 $115,397
======== ========
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three
Months For the Six Months
Ended July 31, Ended July 31,
-------------- --------------
2010 2009 2010 2009
---- ---- ----
Revenues:
Equipment leasing $6,493 $4,802 $16,059 $11,128
Lease pool equipment
sales 159 101 522 170
Seamap equipment
sales 7,200 7,043 12,981 9,641
Other equipment sales 1,303 731 2,093 2,343
----- --- ----- -----
Total revenues 15,155 12,677 31,655 23,282
------ ------ ------ ------
Cost of sales:
Direct costs -
equipment leasing 846 925 1,590 1,453
Direct costs -lease
pool depreciation 5,355 4,416 10,267 8,517
Cost of lease pool
equipment sales 100 87 249 97
Cost of Seamap and
other equipment
sales 4,199 3,917 7,951 6,111
Total cost of sales 10,500 9,345 20,057 16,178
------ ----- ------ ------
Gross profit 4,655 3,332 11,598 7,104
Operating expenses:
General and
administrative 4,162 3,969 8,349 7,471
Provision for
doubtful accounts 797 649 797 649
Depreciation and
amortization 296 223 575 477
--- --- --- ---
Total operating
expenses 5,255 4,841 9,721 8,597
----- ----- ----- -----
Operating (loss)
income (600) (1,509) 1,877 (1,493)
Other income (expenses):
Gain from bargain
purchase in business
combination - - 1,304 -
Interest, net (118) (92) (212) (181)
Other, net 437 163 (65) 282
--- --- --- ---
Total other income 319 71 1,027 101
(Loss) Income before
income taxes (281) (1,438) 2,904 (1,392)
Benefit (provision)
for income taxes 135 428 (656) 302
--- --- ---- ---
Net (loss) income $(146) $(1,010) $2,248 $(1,090)
===== ======= ====== =======
Net (loss) income per common
share:
Basic $(0.01) $(0.10) $0.23 $(0.11)
====== ====== ===== ======
Diluted $(0.01) $(0.10) $0.22 $(0.11)
====== ====== ===== ======
Shares used in computing net
(loss) income per
common share:
Basic 9,838 9,797 9,824 9,790
Diluted 9,838 9,797 10,081 9,790
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Six Months Ended
July 31,
--------
2010 2009
---- ----
Cash flows from operating
activities:
Net income (loss) $2,248 $(1,090)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 10,970 9,055
Stock-based compensation 770 840
Gain from bargain purchase in
business combination (1,304) -
Provision for doubtful accounts 797 649
Provision for inventory obsolescence 104 (75)
Gross profit from sale of lease pool
equipment (273) (73)
Excess tax benefit from exercise of
non-qualified stock options (3) (7)
Deferred tax benefit (1,258) (1,210)
Changes in non-current income taxes
payable 281 (294)
Changes in working capital items,
net of effects from business combination:
Accounts receivable 1,225 501
Contracts receivable 1,363 267
Inventories 1,353 (1,677)
Prepaid expenses and other current
assets (196) 405
Income taxes receivable and payable 778 2,213
Costs incurred and estimated profit
in excess of billings on uncompleted
contract (38) 973
Prepaid foreign income tax (228) -
Accounts payable, accrued expenses,
other current liabilities and deferred
revenue 1,554 240
----- ---
Net cash provided by operating
activities 18,143 10,717
------ ------
Cash flows from investing
activities:
Purchases of seismic equipment held
for lease (6,957) (11,597)
Purchases of property and equipment (80) (283)
Sale of used lease pool equipment 522 170
Acquisition of AES, net of cash
acquired (2,100) -
Net cash used in investing
activities (8,615) (11,710)
------ -------
Cash flows from financing
activities:
Net (payments on) proceeds from line
of credit (6,050) 1,500
Payments on borrowings (120) -
(Purchases of) proceeds from short-
term investments (52) 797
Proceeds from issuance of common
stock upon exercise of stock
options, net of stock surrendered to
pay taxes 244 (6)
Excess tax benefit from exercise of
non-qualified stock options 3 7
--- ---
Net cash (used in) provided by
financing activities (5,975) 2,298
Effect of changes in foreign
exchange rates on cash and cash
equivalents 83 (180)
--- ----
Net change in cash and cash
equivalents 3,636 1,125
Cash and cash equivalents, beginning
of period 6,130 5,063
----- -----
Cash and cash equivalents, end of
period $9,766 $6,188
====== ======
Note A
MITCHAM INDUSTRIES, INC.
Reconciliation of Net Income (loss) to EBITDA
(Unaudited)
For the Three Months For the Six Months
Ended Ended
July 31, July 31,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
(in thousands) (in thousands)
Net (loss) income $(146) $(1,010) $2,248 $(1,090)
Interest expense, net 118 92 212 181
Depreciation and
amortization 5,679 4,670 10,970 9,055
(Benefit) provision
for income taxes (135) (428) 656 (302)
Gain from bargain
purchase - - (1,304) -
--- --- ------ ---
EBITDA (1) 5,516 3,324 12,782 7,844
Stock-based compensation 497 424 770 840
--- --- --- ---
Adjusted EBITDA (1) $6,013 $3,748 $13,552 $8,684
====== ====== ======= ======
(1) EBITDA is defined as net income (loss) before (a) interest expense, net of interest income, (b) provision for (or benefit from) income taxes (c) depreciation, amortization and impairment and (d) the gain from bargain purchase. Adjusted EBITDA excludes stock-based compensation. We consider EBITDA and Adjusted EBITDA to be important indicators for the performance of our business, but not measures of performance calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We have included these non-GAAP financial measures because management utilizes this information for assessing our performance and as indicators of our ability to make capital expenditures, service debt and finance working capital requirements. The covenants of our revolving credit agreement require us to maintain a minimum level of EBITDA. Management believes that EBITDA and Adjusted EBITDA are measurements that are commonly used by analysts and some investors in evaluating the performance of companies such as us. In particular, we believe that it is useful to our analysts and investors to understand this relationship because it excludes transactions not related to our core cash operating activities. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations. EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP and should not be considered in isolation or as alternatives to cash flow from operating activities or as alternatives to net income as indicators of operating performance or any other measures of performance derived in accordance with GAAP. In evaluating our performance as measured by EBITDA, management recognizes and considers the limitations of this measurement. EBITDA and Adjusted EBITDA do not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA and Adjusted EBITDA are only two of the measurements that management utilizes. Other companies in our industry may calculate EBITDA or Adjusted EBITDA differently than we do and EBITDA and Adjusted EBITDA may not be comparable with similarly titled measures reported by other companies.
Mitcham Industries, Inc.
Segment Operating Results
(unaudited)
For the Three Months For the Six Months
Ended Ended
July 31, July 31,
2010 2009 2010 2009
---- ---- ---- ----
(in thousands) (in thousands)
Revenues:
Equipment Leasing $7,955 $5,634 $18,674 $13,641
Seamap 7,253 7,172 13,083 9,855
Inter-segment sales (53) (129) (102) (214)
--- ---- ---- ----
Total revenues 15,155 12,677 31,655 23,282
------ ------ ------ ------
Cost of sales:
Equipment Leasing 7,181 6,283 13,615 12,190
Seamap 3,411 3,231 6,623 4,340
Inter-segment costs (92) (169) (181) (352)
--- ---- ---- ----
Total cost of sales 10,500 9,345 20,057 16,178
------ ----- ------ ------
Gross profit 4,655 3,332 11,598 7,104
Operating expenses:
General and administrative 4,162 3,969 8,349 7,471
Provision for doubtful
accounts 797 649 797 649
Depreciation and
amortization 296 223 575 477
--- --- --- ---
Total operating
expenses 5,255 4,841 9,721 8,597
----- ----- ----- -----
Operating (loss) income $(600) $(1,509) $1,877 $(1,493)
===== ======= ====== =======
Equipment Leasing
Segment:
Revenue:
Equipment leasing $6,493 $4,802 $16,059 $11,128
Lease pool equipment
sales 159 101 522 170
New seismic equipment
sales 234 17 295 27
SAP equipment sales 1,069 714 1,798 2,316
----- --- ----- -----
7,955 5,634 18,674 13,641
Cost of sales:
Lease pool depreciation 5,395 4,463 10,347 8,609
Direct costs-equipment
leasing 846 925 1,590 1,453
Cost of lease pool
equipment sales 100 87 249 97
Cost of new seismic
Equipment sales 72 14 83 19
Cost of SAP equipment
sales 768 794 1,346 2,012
--- --- ----- -----
7,181 6,283 13,615 12,190
----- ----- ------ ------
Gross profit (loss) $774 $(649) $5,059 $1,451
==== ===== ====== ======
Gross profit % 10% (12)% 27% 11%
Seamap Segment:
Equipment sales $7,253 $7,172 $13,083 $9,855
Cost of equipment
sales 3,411 3,231 6,623 4,340
----- ----- ----- -----
Gross profit $3,842 $3,941 $6,460 $5,515
====== ====== ====== ======
Gross profit % 53% 55% 49% 56%
Contacts: Billy F. Mitcham, Jr., President & CEO
Mitcham Industries, Inc.
936-291-2277
Jack Lascar / Karen Roan
Dennard Rupp Gray & Lascar (DRG&L)
713-529-6600
SOURCE Mitcham Industries, Inc.
Copyright (C) 2010 PR Newswire. All rights reserved
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