Mitcham Industries Reports Fiscal 2018 Fourth Quarter And Full Year Results

MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

January 31,

2018

2017

ASSETS

Current assets:

Cash and cash equivalents

$

9,902

$

2,902

Restricted cash

244

609

Accounts and contracts receivable, net of allowance for doubtful accounts of $3,885 and $3,716 at January 31, 2018 and January 31, 2017, respectively

10,494

15,830

Inventories, net

10,856

11,960

Prepaid income taxes

—

1,565

Prepaid expenses and other current assets

1,550

2,193

Total current assets

33,046

35,059

Seismic equipment lease pool and property and equipment, net

22,900

43,838

Intangible assets, net

8,015

9,012

Goodwill

2,531

3,997

Non-current prepaid income taxes

1,609

—

Long-term receivables, net of allowance for doubtful accounts of $2,282 and $2,188 at January 31, 2018 and January 31, 2017, respectively

4,652

2,780

Other assets

926

28

Total assets

$

73,679

$

94,714

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

1,271

$

1,929

Current maturities – long-term debt

—

6,371

Deferred revenue

741

651

Accrued expenses and other current liabilities

5,253

4,514

Income taxes payable

258

—

Total current liabilities

7,523

13,465

Deferred tax liability

307

317

Total liabilities

7,830

13,782

Shareholders' equity:

Preferred stock, $1.00 par value; 1,000 shares authorized; 532 and 343 issued and outstanding at January 31, 2018 and January 31, 2017, respectively

11,544

7,294

Common stock $.01 par value; 20,000 shares authorized; 14,019 shares issued at January 31, 2018 and January 31, 2017

140

140

     Additional paid-in capital

122,304

121,401

     Treasury stock, at cost (1,929 at January 31, 2018 and 2017)

(16,860)

(16,858)

     Accumulated deficit

(42,425)

(20,451)

     Accumulated other comprehensive loss

(8,854)

(10,594)

          Total shareholders' equity

65,849

80,932

             Total liabilities and shareholders' equity

$

73,679

$

94,714

MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (in thousands, except per share data)

(unaudited)

For the Three Months Ended January 31,

For the Twelve Months Ended January 31,

2018

2017

2018

2017

Revenues:

Sale of marine technology products

$

4,991

$

6,865

$

27,420

$

25,058

Equipment leasing

2,061

2,342

7,826

10,161

Sale of lease pool equipment

3,311

3,341

13,030

5,780

Total revenues

10,363

12,548

48,276

40,999

Cost of sales:

Sale of marine technology products

3,711

3,509

16,686

13,571

Equipment leasing (including lease pool depreciation)

3,949

6,785

17,764

29,037

Lease pool equipment sales

1,332

4,923

7,742

5,805

Total cost of sales

8,992

15,217

42,192

48,413

Gross profit (loss)

1,371

(2,669)

6,084

(7,414)

Operating expenses:

Selling, general and administrative

5,155

4,593

19,663

19,753

Research and development

865

356

1,502

974

Provision for doubtful accounts

1,013

750

1,013

750

Impairment of intangible assets

1,466

—

1,466

—

Depreciation and amortization

526

542

2,148

2,399

Total operating expenses

9,025

6,241

25,792

23,876

Operating loss

(7,654)

(8,910)

(19,708)

(31,290)

Other income (expense):

Interest income (expense)

24

(104)

47

(643)

Other, net

(391)

468

(498)

594

Total other (expense) income

(367)

364

(451)

(49)

Loss before income taxes

(8,021)

(8,546)

(20,159)

(31,339)

Benefit from (provision for) income taxes

262

(1,308)

(910)

(1,814)

Net loss

$

(7,759)

$

(9,854)

$

(21,069)

$

(33,153)

Preferred stock dividends

(275)

(192)

(905)

(486)

Net loss attributable to common shareholders

$

(8,034)

$

(10,046)

$

(21,974)

$

(33,639)

Net loss per common share:

Basic

$

(0.66)

$

(0.83)

$

(1.82)

$

(2.79)

Diluted

$

(0.66)

$

(0.83)

$

(1.82)

$

(2.79)

Shares used in computing loss per common share:

Basic

12,087

12,077

12,084

12,070

Diluted

12,087

12,077

12,084

12,070

MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

For the Twelve Months Ended January 31,

2018

2017

Cash flows from operating activities:

Net loss

$

(21,069)

$

(33,153)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

16,637

28,275

Stock-based compensation

903

737

Impairment

1,466

—

Provision for doubtful accounts, net of charge offs

1,013

750

Provision for inventory obsolescence

815

75

Gross (profit) loss from sale of lease pool equipment

(4,906)

298

Deferred tax expense

(20)

934

Non-Current prepaid tax

182

—

Changes in:

Trade accounts and contracts receivable

4,405

7,345

Inventories

685

850

Income taxes receivable and payable

—

475

Accounts payable, accrued expenses and other current liabilities

(455)

(2,189)

Prepaid and other current assets, net

1,002

(1,327)

Foreign exchange losses net of gains

61

84

Net cash provided by operating activities

719

3,154

Cash flows from investing activities:

Purchases of seismic equipment held for lease

(909)

(636)

Purchases of property and equipment

(407)

(283)

Sales of used lease pool equipment

10,313

5,331

Net cash provided by investing activities

8,997

4,412

Cash flows from financing activities:

Net payments on revolving line of credit

(3,500)

(10,900)

Payments on term loan and other borrowings

(2,807)

(3,217)

Net proceeds from preferred stock offering

4,174

7,294

Preferred stock dividends

(905)

(486)

Purchase of treasury stock

—

(4)

Net cash used in financing activities

(3,038)

(7,313)

Effect of changes in foreign exchange rates on cash and cash equivalents and restricted cash

(43)

(511)

Net increase (decrease) in cash and cash equivalents and restricted cash

6,635

(258)

Cash and cash equivalents and restricted cash, beginning of year

3,511

3,769

Cash and cash equivalents and restricted cash, end of year

$

10,146

$

3,511

MITCHAM INDUSTRIES, INC.

Reconciliation of Net Loss and Net Cash Provided by Operating Activities to EBITDA and

Adjusted EBITDA

(unaudited)

For the Three Months Ended January 31,

For the Twelve Months Ended January 31,

2018

2017

2018

2017

(in thousands)

(in thousands)

Reconciliation of Net loss to EBITDA and Adjusted EBITDA

Net loss

$

(7,759)

$

(9,854)

$

(21,069)

$

(33,153)

Interest (income) expense, net

(24)

104

(47)

643

Depreciation and amortization

3,418

6,348

16,637

28,275

Benefit from (provision for) income taxes

(262)

1,308

910

1,814

EBITDA (1)

(4,627)

(2,094)

(3,569)

(2,421)

Non-cash foreign exchange losses (gains)

524

(369)

844

(338)

Stock-based compensation

218

150

903

737

Impairment of  intangible  assets

1,466

-

1,466

-

Cost of lease pool sales

1,263

4,865

7,571

5,629

Adjusted EBITDA (1)

$

(1,156)

$

2,552

$

7,215

$

3,607

Reconciliation of Net cash provided by operating activities to EBITDA

Net cash (used in) provided by operating activities

$

(1,455)

$

(533)

$

719

$

3,154

Stock-based compensation

(218)

(150)

(903)

(737)

Provision for doubtful accounts

(1,013)

(750)

(1,013)

(750)

Provision for inventory obsolescence

(757)

(10)

(815)

(75)

Changes in trade accounts, contracts and notes receivable

724

2,963

(4,405)

(7,345)

Interest received

2

63

86

673

Taxes paid, net of refunds

58

(296)

494

409

Gross profit (loss) from sale of lease pool equipment

1,826

(1,122)

4,906

298

Changes in inventory

(606)

(379)

(685)

(850)

Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue

(789)

(2,053)

455

2,189

Impairment of intangible assets

(1,466)

-

(1,466)

-

Changes in prepaid expenses and other current assets

(795)

436

(1,002)

1,329

Foreign exchange losses (gains), net

(313)

297

(61)

(84)

Other

175

(560)

121

(632)

EBITDA (1)

$

(4,627)

$

(2,094)

$

(3,569)

$

(2,421)

(1)

EBITDA is defined as net income before (a) interest income and interest expense, (b) provision for (or benefit from) income taxes and (c) depreciation and amortization. Adjusted EBITDA excludes non-cash foreign exchange gains and losses, non-cash costs of lease pool equipment sales, certain non-recurring contract settlement costs, impairment of intangible assets and stock-based compensation. We consider EBITDA and Adjusted EBITDA to be important indicators for the performance of our business, but not measures of performance or liquidity 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 liquidity, and as indicators of our ability to make capital expenditures, service debt and finance working capital requirements and we believe that EBITDA and Adjusted EBITDA are measurements that are commonly used by analysts and some investors in evaluating the performance and liquidity 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 or liquidity 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

(in thousands)

(unaudited)

For the Three Months Ended January 31,

For the Twelve Months Ended January 31,

2018

2017

2018

2017

(in thousands)

(in thousands)

Revenues:

Marine technology products

$

5,008

$

6,871

$

27,573

$

25,100

Equipment leasing

5,373

5,739

20,919

15,961

Inter-segment sales

(18)

(62)

(216)

(62)

Total revenues

10,363

12,548

48,276

40,999

Cost of sales:

Marine technology products

3,728

3,551

16,844

13,612

Equipment leasing

5,282

11,729

25,563

34,863

Inter-segment costs

(18)

(63)

(215)

(62)

Total cost of sales

8,992

15,217

42,192

48,413

Gross profit (loss)

1,371

(2,669)

6,084

(7,414)

Operating expenses:

Selling, general and administrative

5,155

4,593

19,663

19,753

Research and development

865

356

1,502

974

Provision for doubtful accounts

1,013

750

1,013

750

Impairment of intangible assets

1,466

—

1,466

—

Depreciation and amortization

526

542

2,148

2,399

Total operating expenses

9,025

6,241

25,792

23,876

Operating loss

$

(7,654)

$

(8,910)

$

(19,708)

$

(31,290)

Marine Technology Products Segment:

Revenues:

Seamap

$

2,474

$

4,423

$

18,527

$

14,085

Klein

1,146

1,745

4,602

8,207

SAP

1,669

1,533

5,667

4,786

Intra-segment sales

(281)

(830)

(1,223)

(1,978)

5,008

6,871

27,573

25,100

Cost of sales:

Seamap

1,580

1,605

10,018

6,106

Klein

1,061

1,377

3,632

5,707

SAP

1,355

1,232

4,513

3,668

Intra-segment sales

(268)

(663)

(1,319)

(1,869)

3,728

3,551

16,844

13,612

Gross profit

$

1,280

$

3,320

$

10,729

$

11,488

Gross profit margin

26

%

48

%

39

%

46

%

Equipment Leasing Segment:

Revenue:

Equipment leasing

$

2,060

$

2,342

$

7,826

$

10,161

Lease pool equipment sales

3,089

3,075

12,478

5,332

Other equipment sales

224

322

615

468

5,373

5,739

20,919

15,961

Cost of sales:

Direct costs-equipment leasing

1,088

1,008

3,450

3,284

Lease pool depreciation

2,861

5,777

14,370

25,753

Cost of lease pool equipment sales

1,263

4,865

7,571

5,629

Cost of other equipment sales

70

79

172

197

5,282

11,729

25,563

34,863

Gross profit (loss)

$

91

$

(5,990)

$

(4,644)

$

(18,902)

 Contacts: 

Rob Capps, Co-CEO

Mitcham Industries, Inc.

936-291-2277

Jack Lascar / Mark Roberson

Dennard Lascar Investor Relations

713-529-6600