MIND TECHNOLOGY, INC. HUNTSVILLE, Texas, Sept. 2, 2015 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("the Company") today announced financial results for its fiscal 2016 second quarter ended July 31, 2015.
Total revenues for the second quarter of fiscal 2016 were $7.6 million compared to $19.5 million in the second quarter of fiscal 2015. Equipment leasing revenues, excluding equipment sales, were $4.5 million in the second quarter compared to $8.2 million in the same period last year. The Company reported a net loss of $5.8 million, or $(0.49) per share, in the second quarter of fiscal 2016 compared to a net loss of $3.3 million, or $(0.26) per share, in the second quarter of fiscal 2015 and a sequential net loss of $0.2 million, or $(0.02) per share, in the first quarter of fiscal 2016.
Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation and non-cash foreign exchange losses) for the second quarter of fiscal 2016 was $0.7 million compared to $5.8 million in the same period last year. Adjusted EBITDA for the first quarter of fiscal 2016 was $7.7 million. Adjusted 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 in the accompanying financial tables.
Rob Capps, Executive Vice President, Chief Financial Officer and Interim Co-COO, stated, "We continue to be impacted by very challenging market conditions in the seismic industry. Our second quarter, which is seasonally the weakest quarter of the year in terms of seismic activity, proved to be very difficult as we continue to operate in the midst of a global slowdown in the oil and gas industry. Our results were also impacted by unexpected shipment delays at Seamap, which reduced second quarter revenues by approximately $6.0 million. We currently anticipate that all of these orders will now ship in the third quarter.
"Our equipment leasing revenues were impacted by reduced demand for our leased equipment, excess available equipment in most markets and resulting pressure on pricing. Land seismic exploration activity is quite subdued throughout the Western Hemisphere and significant excess capacity remains in this market. As a result of these market conditions and to normal seasonal declines, both North America and Latin America made nominal contributions to our leasing revenues this quarter. Europe remains one of our few markets with a stable level of activity due to an anchor project that should continue well into next fiscal year. Activity in the Russian market during the quarter was impacted by the normal seasonal decline, although we did have a couple of smaller projects continue past the end of the winter season.
"Marine leasing activity was up nominally both versus last year and sequentially, despite the ongoing consolidation in the industry and the overall decline in seismic exploration activity. Nevertheless, we continue to experience some uptick in inquiries for the rental of marine equipment. At Seamap, three significant orders that we had expected to ship in the second quarter were delayed due to a number of internal and external factors, but we now expect all these orders to be completed in the third quarter.
"Looking at the remainder of fiscal 2016, we expect the overall seismic market activity to remain very challenging with limited visibility. However, based on early customer inquiries, it appears that the demand for equipment in Russia this winter may be at least as strong as last year. There are some early indications of activity in Alaska for late this year and early next year, but in Canada, early indications for the upcoming winter season are not encouraging. We have provided bids for projects scheduled in Latin America later this year. In addition, we have fielded inquiries for projects in various locations in the Eastern Hemisphere. On balance, we expect a slight increase in our leasing revenues in the third quarter with further progress in the fourth quarter, aided by normal seasonal improvement in some areas.
"Seamap should post a much improved second half driven by the delivery of delayed shipments from the second quarter, as well as additional shipments scheduled in the back half of the year. Although Seamap is impacted by the overall condition in the seismic industry, we do see opportunities for equipping various new or reconfigured vessels, particularly in the Eastern Hemisphere.
"We also expect a much improved second half of the year from sales of oceanographic and hydrographic equipment by our Australian subsidiary. Many expected projects were not scheduled for delivery until later this year.
"Despite the disappointing results and very difficult market conditions, we generated positive Adjusted EBITDA and cash flow from operating activities during the quarter. Cash flow from operating activities was over $5.0 million during the second quarter and $11.6 million for the first half of our fiscal year. During the first half of fiscal 2016, we reduced our outstanding indebtedness by $12.1 million, and subsequent to July 31, 2015, decreased our debt by another $1.3 million. Accordingly, as of today our net debt is approximately $10.0 million. We have significantly reduced our operating costs and continue to look for additional measures to reduce our direct and indirect costs.
"We have considerable experience navigating through these industry cycles, and believe our strong balance sheet provides stability and flexibility. Our capital structure is solid, and we believe that it positions us to make the most of any opportunities that may arise in this environment."
FISCAL 2016 SECOND QUARTER RESULTS
Total revenues for the second quarter of fiscal 2016 were $7.6 million compared to $19.5 million in the same period last year. A significant portion of our revenues is typically generated from geographic areas outside the United States. The percentage of revenues from international customers was approximately 93% in the second quarter of fiscal 2016 compared to approximately 84% in last year's second fiscal quarter.
Equipment leasing revenues for the second quarter of fiscal 2016 excluding equipment sales were $4.5 million compared to $8.2 million in the same period last year. The year-over-year decrease in equipment leasing revenues was primarily driven by a major reduction in exploration activity due to depressed oil prices, especially in the United States, Canada, and Latin America, partially offset by ongoing activity in Europe.
Lease pool equipment sales were $0.2 million in the second quarter of fiscal 2016 compared to $1.3 million in the first quarter a year ago. Sales of new seismic, hydrographic and oceanographic equipment contributed $0.6 million to the second quarter of fiscal 2016 compared to $2.3 million for the second quarter of fiscal 2015.
Seamap equipment sales for the second quarter of fiscal 2016 declined to $2.2 million compared to $7.7 million in the same period a year ago. There were no deliveries of digital source controller or RGPS systems in the second quarter of fiscal 2016. Seamap revenues consisted of other equipment sales and after-market business, including replacement parts, and ongoing support and repair services.
Lease pool depreciation expense in the second quarter of fiscal 2016 decreased to $7.6 million from $8.9 million in the same period a year ago, mainly due to the reduction in lease pool purchases in fiscal 2015 and 2016.
CONFERENCE CALL
We have scheduled a conference call for Thursday, September 3 at 9:00 a.m. Eastern Time to discuss our fiscal 2016 second quarter results. To access the call, please dial (412) 902-0030 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 "Investor Relations." A telephonic replay of the conference call will be available through September 17, 2015 and may be accessed by calling (201) 612-7415 and using passcode 13617512#. A webcast 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 July 31, 2015 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.
Tables to Follow
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
July 31, 2015 January 31, 2015
------------- ----------------
ASSETS
Current assets:
Cash and cash
equivalents $2,800 $5,175
Restricted cash 71 184
Accounts
receivable, net 18,093 23,693
Contracts and
notes
receivable 3,201 3,639
Inventories, net 14,477 11,451
Prepaid income
taxes 1,691 1,018
Deferred tax
asset 2,453 2,427
Prepaid expenses
and other
current assets 2,787 6,562
Total current
assets 45,573 54,149
Seismic
equipment lease
pool and
property and
equipment, net 86,542 100,087
Intangible
assets, net 9,975 10,831
Goodwill 5,579 5,594
Deferred tax
asset 12,014 8,922
Other assets 27 28
--- ---
Total assets $159,710 $179,611
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,761 $2,399
Current
maturities -
long-term debt 3,117 3,218
Deferred revenue 481 710
Accrued expenses
and other
current
liabilities 4,004 3,673
----- -----
Total current
liabilities 9,363 10,000
Long-term debt,
net of current
maturities 11,157 23,137
Total
liabilities 20,520 33,137
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;
14,012 shares
issued at July
31, 2015 and
January 31,
2015 140 140
Additional paid-
in capital 120,234 119,787
Treasury stock,
at cost (1,928
shares at July
31, 2015 and
January 31,
2015,
respectively) (16,851) (16,851)
Retained
earnings 45,839 51,924
Accumulated
other
comprehensive
income (10,172) (8,526)
------- ------
Total
shareholders'
equity 139,190 146,474
------- -------
Total
liabilities and
shareholders'
equity $159,710 $179,611
======== ========
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
For the Three Months For the Six Months
Ended July 31, Ended July 31,
-------------- --------------
2015 2014 2015 2014
---- ----
Revenues:
Equipment leasing $4,517 $8,226 $15,703 $24,387
Lease pool equipment
sales 172 1,285 399 2,386
Seamap equipment sales 2,233 7,709 7,299 13,769
Other equipment sales 632 2,325 1,295 4,735
--- ----- ----- -----
Total revenues 7,554 19,545 24,696 45,277
----- ------ ------ ------
Cost of sales:
Direct costs -equipment
leasing 1,052 1,131 2,419 2,357
Direct costs -lease pool
depreciation 7,580 8,866 15,218 17,561
Cost of lease pool
equipment sales 85 429 182 823
Cost of Seamap and other
equipment sales 1,446 5,882 4,910 10,056
Total cost of sales 10,163 16,308 22,729 30,797
------ ------ ------ ------
Gross (loss) profit (2,609) 3,237 1,967 14,480
Operating expenses:
General and
administrative 4,964 6,673 9,860 12,792
Provision for doubtful
accounts 600 - 600 -
Depreciation and
amortization 631 560 1,268 912
--- --- ----- ---
Total operating expenses 6,195 7,233 11,728 13,704
----- ----- ------ ------
Operating (loss) income (8,804) (3,996) (9,761) 776
Other income (expense):
Interest, net (166) (85) (387) (200)
Other, net 325 58 1,111 247
--- --- ----- ---
Total other income
(expense) 159 (27) 724 47
(Loss) income before
income taxes (8,645) (4,023) (9,037) 823
Benefit (provision) for
income taxes 2,797 676 2,952 (433)
----- --- ----- ----
Net (loss) income $(5,848) $(3,347) $(6,085) $390
======= ======= ======= ====
Net (loss) income per common share:
Basic $(0.49) $(0.26) $(0.51) $0.03
====== ====== ====== =====
Diluted $(0.49) $(0.26) $(0.51) $0.03
====== ====== ====== =====
Shares used in computing net income per common share:
Basic 12,037 12,671 12,028 12,710
Diluted 12,037 12,671 12,028 13,044
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Six Months Ended
July 31,
-------------------------
2015 2014
---- ----
Cash flows from operating
activities:
Net (loss) income $(6,085) $390
Adjustments to reconcile net
(loss) income to net cash
provided by operating
activities:
Depreciation and amortization 16,555 18,545
Stock-based compensation 519 696
Provision for inventory
obsolescence 90 44
Provision for doubtful
accounts, net of charge offs 600 -
Gross profit from sale of
lease pool equipment (216) (1,563)
Excess tax benefit from
exercise of non-qualified
stock options and restricted
shares (72) (123)
Deferred tax benefit (3,301) (2,009)
Changes in working capital
items:
Accounts receivable 5,338 637
Contracts and notes receivable - 122
Inventories (3,349) 416
Prepaid expenses and other
current assets 3,892 (2,239)
Income taxes payable (640) 850
Accounts payable, accrued
expenses, other current
liabilities and deferred
revenue (661) 3,384
Foreign exchange gains/losses (1,020) -
Net cash provided by operating
activities 11,650 19,150
------ ------
Cash flows from investing
activities:
Purchases of seismic equipment
held for lease (1,874) (13,716)
Acquisition of business - (14,500)
Purchases of property and
equipment (171) (218)
Sale of used lease pool
equipment 399 2,386
Net cash used in investing
activities (1,646) (26,048)
------ -------
Cash flows from financing
activities:
Net (payments on) proceeds
from revolving line of credit (10,500) 3,000
Payments on term loan and
other borrowings (1,609) (67)
Net proceeds from short-term
investments 113 85
Proceeds from issuance of
common stock upon exercise of
options - 37
Purchase of treasury stock - (2,187)
Excess tax benefit from
exercise of non-qualified
stock options and restricted
shares 72 123
Net cash (used in) provided by
financing activities (11,924) 991
Effect of changes in foreign
exchange rates on cash and
cash equivalents (455) 172
---- ---
Net change in cash and cash
equivalents (2,375) (5,735)
Cash and cash equivalents,
beginning of period 5,175 15,162
----- ------
Cash and cash equivalents, end
of period $2,800 $9,427
====== ======
Mitcham Industries, Inc.
Reconciliation of Net Income and Net Cash Provided by Operating Activities to EBITDA
For the Three Months Ended For the Six Months Ended
July 31, July 31,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
(in thousands) (in thousands)
Reconciliation of Net income to
EBITDA and Adjusted EBITDA
Net (loss) income $(5,848) $(3,347) $(6,085) $390
Interest expense, net 166 85 387 200
Depreciation and
amortization 8,248 9,463 16,555 18,545
(Benefit) provision
for income taxes (2,797) (676) (2,952) 433
EBITDA (1) (231) 5,525 7,905 19,568
Non-cash foreign
exchange losses
(gains) 672 (39) (87) (103)
Stock-based
compensation 238 297 519 696
--- --- --- ---
Adjusted EBITDA (1) $679 $5,783 $8,337 $20,161
==== ====== ====== =======
Reconciliation of Net cash
provided by operating activities
to EBITDA
Net cash provided by
operating activities $5,212 $5,092 $11,650 $19,150
Stock-based
compensation (238) (297) (519) (696)
Provision for doubtful
accounts (600) - (600) -
Changes in trade
accounts, contracts
and notes receivable (8,177) (291) (5,338) (759)
Interest paid 169 256 397 392
Taxes paid, net of
refunds 407 (179) 1,203 1,376
Gross profit from sale
of lease pool
equipment 87 856 216 1,563
Changes in inventory 2,499 (241) 3,349 (416)
Changes in accounts
payable, accrued
expenses and other
current liabilities
and deferred revenue 914 (3,420) 661 (3,384)
Changes in prepaid
expenses and other
current assets (615) 3,582 (3,892) 2,239
Other 111 167 778 103
--- --- --- ---
EBITDA (1) $(231) $5,525 $7,905 $19,568
===== ====== ====== =======
(1) EBITDA is defined as net income
before (a) interest expense, net of
interest income, (b) provision for
(or benefit from) income taxes and
(c) depreciation, amortization and
impairment. Adjusted EBITDA
excludes stock-based compensation
and non-cash foreign exchange
gains and losses. 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
("U.S. 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. The covenants of the
Credit Agreement and the Seamap
Credit Facility each contain
financial covenants that are based
upon EBITDA or Adjusted EBITDA.
Management believes 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 and liquidity of our
core cash operations. EBITDA and
Adjusted EBITDA are not measures of
financial performance or liquidity
under U.S. 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 U.S. 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 Ended For the Six Months Ended
July 31, July 31,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
($ in ($ in
thousands) thousands)
Revenues:
Equipment Leasing $5,321 $11,836 $17,397 $31,508
Seamap 2,273 8,008 7,388 14,205
Inter-segment
sales (40) (299) (89) (436)
--- ---- --- ----
Total revenues 7,554 19,545 24,696 45,277
----- ------ ------ ------
Cost of sales:
Equipment Leasing 9,213 12,218 18,873 24,166
Seamap 1,027 4,230 4,015 6,902
Inter-segment
costs (77) (140) (159) (271)
--- ---- ---- ----
Total cost of
sales 10,163 16,308 22,729 30,797
------ ------ ------ ------
Gross (loss)
profit (2,609) 3,237 1,967 14,480
Operating expenses:
General and
administrative 4,964 6,673 9,860 12,792
Provision for
doubtful accounts 600 - 600 -
Depreciation and
amortization 631 560 1,268 912
--- --- ----- ---
Total operating
expenses 6,195 7,233 11,728 13,704
----- ----- ------ ------
Operating (loss)
income $(8,804) $(3,996) $(9,761) $776
======= ======= ======= ====
Equipment Leasing Segment:
Revenue:
Equipment leasing $4,517 $8,226 $15,703 $24,387
Lease pool
equipment sales 172 1,285 399 2,386
New seismic
equipment sales 110 347 231 944
SAP equipment
sales 522 1,978 1,064 3,791
--- ----- ----- -----
5,321 11,836 17,397 31,508
Cost of sales:
Direct costs-
equipment leasing 1,052 1,131 2,419 2,357
Lease pool
depreciation 7,612 8,896 15,283 17,588
Cost of lease pool
equipment sales 85 429 182 823
Cost of new
seismic equipment
sales 59 267 153 530
Cost of SAP
equipment sales 405 1,495 836 2,868
--- ----- --- -----
9,213 12,218 18,873 24,166
----- ------ ------ ------
Gross profit $(3,892) $(382) $(1,476) $7,342
======= ===== ======= ======
Gross profit % (73)% (3)% (8)% 23%
Seamap Segment:
Equipment sales $2,273 $8,008 $7,388 $14,205
Cost of equipment
sales 1,027 4,230 4,015 6,902
----- ----- ----- -----
Gross profit $1,246 $3,778 $3,373 $7,303
====== ====== ====== ======
Gross profit % 55% 47% 46% 51%
Contacts: Rob Capps, EVP & Co-COO
Mitcham Industries, Inc.
936-291-2277
Jack Lascar / Jenny Zhou
Dennard - Lascar Associates
713-529-6600
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SOURCE Mitcham Industries, Inc.
