Mitcham Industries Reports Fiscal 2014 Third Quarter Results

HUNTSVILLE, Texas, Dec. 10, 2013 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) today announced financial results for its fiscal 2014 third quarter ended October 31, 2013.

Total revenues for the third quarter of fiscal 2014 increased 9.2% to $20.3 million compared to $18.6 million in the third quarter of fiscal 2013. Equipment leasing revenues, excluding equipment sales, were $7.9 million in the third quarter compared to $11.1 million in the same period last year.   Seamap sales increased 23% to $5.5 million compared to $4.5 million in the third quarter of fiscal 2013.  The Company reported a net loss of $2.6 million, or $0.21 per share, for the third quarter of fiscal 2014 compared to net loss of $1.2 million, or $0.10 per share, in the third quarter of fiscal 2013.  Fiscal 2014 third quarter results include a charge of $1.0 million, or approximately $0.07 per share after-tax, to the Company's provision for doubtful accounts. Excluding the impact of this charge, the Company reported a net loss of $1.7 million, or $0.14 per share, for the third quarter of fiscal 2014.

Bill Mitcham, President and CEO, stated, "As we anticipated, the overall market softness that we have experienced since the beginning of this fiscal year continued into the third quarter, resulting in lower year-over-year leasing revenues primarily due to ongoing weakness in U.S. and Latin American land seismic activity.  We did see a sequential improvement in leasing revenues over the second quarter of this year, primarily due to further improvement in Europe and an increase in down hole tool leasing. Total revenues in our Equipment Leasing segment, including equipment sales, increased in the third quarter compared to the same period a year ago primarily due to increased sales from our Australian subsidiary.  Seamap's results improved for the quarter compared to a year ago, despite no major system deliveries in the quarter.  We had expected to deliver one GunLink 4000 system in the quarter, but due to issues with vessel availability, our customer delayed the delivery to a subsequent period.

"Looking at the balance of the year and into early fiscal 2015, we expect our equipment leasing business to improve, partially due to seasonality with the start of the winter seasons in Russia and Canada.  While the Russian winter season is expected to be somewhat stronger than last year, the Canadian winter season appears generally weaker than last year. However, we have recently deployed newly acquired equipment for specific projects that we believe will positively impact our Canadian results over the next couple of quarters. In the Pacific Rim, we anticipate taking advantage of new projects that are scheduled to begin in the current quarter, particularly in Australia.  We are finally experiencing meaningful improvement in Latin America, with new projects having started and others scheduled to start, as well as renewed opportunities in the region.  Down hole activity continues to strengthen, and marine leasing seems to have bottomed and is slowly improving.  We believe Seamap will have a stronger fourth quarter due to scheduled deliveries of new systems, including at least one GunLink 4000 system. 

"Over the past several quarters, we have experienced a slowdown in the seismic industry as oil and gas companies have shifted their capital spending more towards production and less to exploration, a trend that appears to be continuing.  However, we are not simply waiting for the markets to recover. Due to new opportunities and customer demand, we have recently made significant additions to our lease pool, specifically in wireless land equipment.  We are taking advantage of the continued industry trend towards wireless land recording systems in certain geographic areas. We have purchased this equipment in response to specific demand, but we believe it will also allow us to pursue other opportunities with new and existing customers.

"Looking into next year, the outlook for land activity in many regions such as Europe, the U.S. and Latin America is encouraging, yet uncertain.  The long-term outlook for marine seismic continues to be attractive, given the announced new vessels and upgrades, although many marine contractors are facing near-term pricing pressure from their customers.  During this period of relative uncertainty, we have worked diligently to position ourselves to make the most of an anticipated recovery in the seismic data acquisition industry with our broad range of equipment, geographic diversity and focus on customer service.  In addition, we continue to maintain a strong financial position to support our leadership position in our markets."  

FISCAL 2014 THIRD QUARTER RESULTS
Total revenues for the third quarter of fiscal 2014 were $20.3 million compared to $18.6 million a year ago.  A significant portion of our revenues are typically generated from geographic areas outside the United States, and during the third quarter of fiscal 2014, the percentage of revenues from international customers was approximately 83% compared to 81% in the third quarter of fiscal 2013. 

Equipment leasing revenues, excluding equipment sales, were $7.9 million compared to $11.1 million in the same period a year ago.  The year-over-year decline in third quarter equipment leasing revenues was largely due to continued softness in land leasing activity in the United States and Latin America, partially offset by improved leasing revenues in Europe and the Pacific Rim as well as an increase in down hole tool leasing.

Lease pool equipment sales were $3.2 million for the third quarter of fiscal 2014 compared to $1.9 million in the third quarter a year ago.  Sales of new seismic, hydrographic and oceanographic equipment were $3.7 million compared to $1.1 million in the third quarter a year ago, primarily attributable to continued strong hydrographic and oceanographic equipment sales in the Pacific Rim.

Seamap equipment sales for the third quarter of fiscal 2014 were $5.5 million compared to $4.5 million in the same period a year ago.  There were no large system deliveries in the fiscal 2014 third quarter as an anticipated GunLink 4000 system was delayed due to vessel availability issues.  In both the third quarters of fiscal 2014 and 2013, Seamap revenues consisted solely of other equipment sales and after-market business including replacement parts, engineering services and ongoing support and repair services. 

Lease pool depreciation expense in the third quarter of fiscal 2014 fell to $7.2 million compared to $8.3 million in the same period a year ago due to certain equipment becoming fully depreciated and the decline in lease pool additions through the first nine months of fiscal 2014.  Lease pool additions in the first nine months of fiscal 2014 were approximately $14.3 million compared to $26.5 million in the first nine months of fiscal 2013.

Gross profit in the third quarter of fiscal 2014 was $5.0 million compared to $4.4 million in the third quarter a year ago.  General and administrative expenses were approximately $6.1 million in the third quarter of fiscal 2014 compared to $5.9 million for same period a year ago. 

EBITDA (earnings before interest, taxes, depreciation and amortization) for the third quarter of fiscal 2014 was $4.5 million, or 22% of revenues, compared to $6.4 million, or 35% of revenues, in the same period last year.  EBITDA, which is not a measure determined in accordance with United States generally accepted accounting principles ("GAAP"), is defined and reconciled to reported net income and cash provided by operating activities, the most comparable GAAP measures, in the accompanying financial tables. 

FISCAL 2014 FIRST NINE MONTHS RESULTS
Total revenues for the first nine months of fiscal 2014 were $68.5 million compared to $76.3 million for the first nine months of fiscal 2013.  Equipment leasing revenues, excluding equipment sales, were $34.4 million in the first nine months of fiscal 2014 compared to $43.0 million in the same period a year ago. Lease pool equipment sales in the first nine months of fiscal 2014 were $6.2 million versus $7.4 million in the first nine months of fiscal 2013.  Sales of new seismic, hydrographic and oceanographic equipment for the nine months of fiscal 2014 were $11.4 million compared to $3.6 million in the same period of fiscal 2013.  Seamap equipment sales for the first nine months of fiscal 2014 were $16.4 million compared to $22.3 million in the same period of last year.

Gross profit in the first nine months of fiscal 2014 was $23.9 million compared to $28.6 million in the first nine months of fiscal 2013.  Net income for the first nine months of fiscal 2014 was $3.0 million, or $0.23 per diluted share, compared to $13.6 million, or $1.03 per diluted share, for the first nine months of fiscal 2013. EBITDA for the first nine months of fiscal 2014 was $27.0 million, or 39% of total revenues, compared to $36.5 million, or 48% of total revenues, in the first nine months of fiscal 2013. 

SHARE REPURCHASE PROGRAM
In April 2013, our Board of Directors authorized a share repurchase program for up to 1.0 million shares of common stock through December 31, 2014.  During the fiscal 2014 third quarter, we repurchased 45,000 shares at an average cost of approximately $14.91 per share.  Through the first nine months of fiscal 2014, we repurchased 147,900 shares of common stock at an average cost of approximately $14.82 per share.  These purchases were made in open market transactions.

Future purchases may be made from time to time, based on market conditions, legal requirements and other corporate considerations, in the open market or otherwise on a discretionary basis.  We expect to finance any repurchases from a combination of cash on hand, cash provided by operating activities and proceeds from our revolving credit facility.

CONFERENCE CALL
We have scheduled a conference call for Wednesday, December 11, 2013 at 9:00 a.m. Eastern Time to discuss our fiscal 2014 third quarter results. To access the call, please dial (480) 629-9692 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 onto the site and clicking "Investors." A telephonic replay of the conference call will be available through December 25, 2013 and may be accessed by calling (303) 590-3030 and using passcode 4650592#. 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 Dennard - Lascar Associates (713) 529‑6600 or email dwashburn@dennardlascar.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; Budapest, Hungary; Lima, Peru; Bogota, Colombia and the United Kingdom, Mitcham conducts operations on a global scale and is the largest independent exploration equipment lessor in the industry.  Through its Seamap business, Mitcham designs, manufactures and sells specialized seismic marine equipment.

Certain statements and information in this press release concerning results for the quarter ended October 31, 2013 may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  The words "believe," "expect," "anticipate," "plan," "intend," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature.  These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us.  While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.  All comments concerning our expectations for future revenues and operating results are based on our forecasts of our existing operations and do not include the potential impact of any future acquisitions.  Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof.  We undertake no obligation to publically update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

SOURCE Mitcham Industries, Inc.