HUNTSVILLE, Texas, Sept. 8 /PRNewswire-FirstCall/ -- Mitcham Industries, Inc. (the "Company") today announced financial results for its fiscal 2010 second quarter ended July 31, 2009.
The Company''s total revenues for the second quarter of fiscal 2010 were $12.7 million compared to $17.5 million in the second quarter of fiscal 2009. The Company reported a net loss of $1.0 million, or $0.10 per share, for the second quarter of fiscal 2010 compared to net income of $1.6 million, or $0.16 per diluted share, for the second quarter of fiscal 2009. Fiscal 2010 second quarter results include a $649,000 charge to the Company''s provision for doubtful accounts and approximately $200,000 in yet to be recovered additional costs related to the Company''s current contract with the Royal Australian Navy. Absent these two items, the Company''s second quarter 2010 net loss was approximately $442,000, or $0.05 per share.
Bill Mitcham, the Company''s President and CEO, stated, "While we experienced a decline in revenues in our equipment leasing business during the second quarter, our Seamap segment had an excellent quarter, reflecting initial shipments on our Polarcus contract. Despite the ongoing challenges in the oil and gas industry, there are several positive factors that bode well for our leasing segment for the balance of the year. We recently began a large job in North America, requiring 27,000 channels, which we expect to contribute significantly to our leasing revenues in the second half of this fiscal year. We are also involved in several projects in South America. As a result of the continued activity and opportunities in South America, we have decided to establish branch operations in Peru and Colombia. Having those operations and equipment on the ground will enable us to better serve our customers in that region. Overall, bidding activity continues to improve and there are indications of renewed activity in Russia and Canada, which we believe will benefit our core leasing business for the balance of this fiscal year.
"In the second quarter, we delivered two GunLink 4000 systems and two BuoyLink systems to Polarcus for the first two of their new-build seismic vessels. We expect to deliver equipment to Polarcus for an additional vessel in the third quarter and a fourth vessel in the fourth quarter of this fiscal year. We had originally been awarded orders to supply a total of six vessels. However, recently Polarcus cancelled two of those vessels in connection with a financing transaction and therefore cancelled our related orders. We are hopeful that the orders for these two vessels will be reissued in our next fiscal year.
"Significantly, subsequent to the second quarter, we renewed our exclusive equipment lease agreement with Sercel Inc. Under the terms of this arrangement, we continue as the exclusive short-term rental agent for Sercel''s DSU3 digital sensor unit throughout the world and become the exclusive short-term rental agent for all of Sercel''s downhole tools in North and South America. The exclusive arrangement extends through December 2011, and we have agreed to purchase minimum quantities of this equipment during that period."
SECOND QUARTER FISCAL 2010 RESULTS
Total revenues for the fiscal 2010 second quarter, which is seasonally the Company''s weakest quarter, were $12.7 million compared to $17.5 million for the second quarter of fiscal 2009, a decline of approximately 28%. The decline was attributable to a substantial decrease in equipment leasing revenues, which partially offset strong sales at Seamap. A significant portion of the Company''s revenues are generated from sources outside the United States, with revenues from international customers totaling approximately 78% of total revenues during the second quarter of fiscal 2010 compared to 86% of total revenues in the same period last year.
Core revenues from equipment leasing, excluding equipment sales, were $4.8 million compared to $7.5 million in the same period a year ago, a 36% decline. Leasing revenues were impacted by continued weak demand for seismic equipment and services due to the lower level of global oil and gas exploration activity.
Sales of new seismic, hydrographic and oceanographic equipment were $731,000 compared to $4.9 million in the comparable period a year ago, and sales of lease pool equipment were $101,000 compared to $1.8 million in the second quarter of fiscal 2009. The lower levels of these sales reflect the overall decline in demand for seismic equipment in the current environment.
Seamap equipment sales in the second quarter increased 114% to $7.0 million from $3.3 million in the comparable period a year ago, primarily due to shipments to Polarcus. During the fiscal 2010 second quarter, the Company delivered two GunLink 4000 fully distributed digital gun controller systems and two BuoyLink RGPS tail buoy positioning systems for the first two Polarcus vessels.
Total gross profit in the fiscal 2010 second quarter was $3.3 million compared to $7.1 million in the second quarter of fiscal 2009, a 53% decline. The fiscal 2010 second quarter gross profit decline was primarily attributable to lower leasing revenues and higher depreciation expense related to new lease pool equipment that the Company acquired during fiscal 2009. Also impacting fiscal 2010 gross profit were approximately $200,000 in additional costs related to SAP''s contract with the Royal Australian Navy. The Company hopes to recoup these costs but has not reflected their recovery in the second quarter results. Gross profit margin for the second quarter of fiscal 2010 was 26% compared to 41% in the same period a year ago for the reasons cited above.
General and administrative ("G&A") costs for the second quarter of fiscal 2010 were $4.0 million compared to $4.4 million in the second quarter of fiscal 2009, reflecting lower personnel related costs. During the second quarter, the Company recorded a $649,000 charge to provision for doubtful accounts as a result of the unexpected bankruptcy of two customers. The Company recorded an operating loss for the second quarter of fiscal 2010 of $1.5 million compared to operating income of $2.3 million in the comparable period a year ago. The loss before income taxes was $1.4 million compared to income of $2.5 million in the second quarter of fiscal 2009. The Company recorded an income tax benefit of $428,000 in the fiscal 2010 second quarter compared to income tax expense of $921,000 in the second quarter of fiscal 2009.
EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter was $3.3 million, or 26% of total revenues, compared to $6.4 million, or 37% of total revenues, in the same period last year. Adjusted EBITDA, which excludes stock-based compensation expense, was $3.7 million, or 30% of total revenues, in the second quarter compared to $6.9 million, or 40% of total revenues, in the second quarter of last year. EBITDA and Adjusted EBITDA, which are not measures determined in accordance with generally accepted accounting principles ("GAAP"), are defined and reconciled to reported net (loss) income, the most comparable GAAP measure, in Note A under the accompanying financial tables.
FIRST HALF FISCAL 2010 RESULTS
Total revenues for the first six months of fiscal 2010 were $23.3 million compared to $36.0 million in the first six months of fiscal 2009. Core equipment leasing revenues were $11.1 million for the first six months of fiscal 2010 versus $19.9 million for the first six months of fiscal 2009. Sales of new seismic, hydrographic and oceanographic equipment for the first half of fiscal 2010 were $2.3 million versus $5.2 million a year ago. Sales of lease pool equipment were $170,000 compared to $2.4 million a year ago. Seamap equipment sales for the first half of fiscal 2010 were $9.6 million compared to $8.6 million in the first half of fiscal 2009.
The Company reported an operating loss for the first half of fiscal 2010 of $1.5 million compared to operating profit of $8.7 million in the first half of fiscal 2009. The net loss for the first six months was $1.1 million, or $0.11 per share, compared to net income of $5.9 million, or $0.57 per diluted share, in the same period a year ago. EBITDA for the first six months of fiscal 2010 was $7.8 million, or 34% of total revenues, compared to $16.8 million, or 47% of total revenues, in the first six months of fiscal 2009. Adjusted EBITDA was $8.7 million, or 37% of total revenues, in the first six months of fiscal 2010 compared to $18.0 million, or 50% of total revenues, in the first six months of last year.
CONFERENCE CALL
The Company has scheduled a conference call for Wednesday, September 9, 2009 at 9:00 a.m. Eastern time to discuss its fiscal 2010 second quarter results. To access the call, please dial (480) 6299771 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 17, 2009 and may be accessed by calling (303) 5903030, and using the passcode 4142934#. 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&E 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; 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 recent declines 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; defaults by customers on amounts due us; possible impairment of long-lived assets; risks associated with our manufacturing operations; 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 and 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.
Contacts: Billy F. Mitcham, Jr., President & CEO Mitcham Industries, Inc. 936-291-2277 Jack Lascar / Karen Roan Dennard Rupp Gray & Easterly (DRG&E) 713-529-6600 - Tables to follow - MITCHAM INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) July 31, January 31, 2009 2009 (unaudited) ---------- ---------- ASSETS Current assets: Cash and cash equivalents $6,188 $5,063 Restricted cash 444 969 Accounts receivable, net 11,649 12,415 Current portion of contracts receivable 569 836 Inventories, net 6,074 3,772 Costs incurred and estimated profit in excess of billings on uncompleted contract 1,240 1,787 Income taxes receivable - 1,000 Deferred tax asset 1,123 1,682 Prepaid expenses and other current assets 1,039 1,535 ----- ----- Total current assets 28,326 29,059 Seismic equipment lease pool and property and equipment, net 65,824 64,251 Intangible assets, net 2,827 2,744 Goodwill 4,320 4,320 Deferred tax asset 1,657 - Long-term portion of contracts receivable 3,806 3,806 Other assets 50 47 --- --- Total assets $106,810 $104,227 ======== ======== LIABILITIES AND SHAREHOLDERS'' EQUITY Current liabilities: Accounts payable $10,325 $13,561 Income taxes payable 722 - Deferred revenue 439 424 Accrued expenses and other current liabilities 2,985 3,877 ----- ----- Total current liabilities 14,471 17,862 Non-current income taxes payable 2,966 3,260 Deferred tax liability - 32 Long-term debt 7,450 5,950 ----- ----- Total liabilities 24,887 27,104 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; 10,737 and 10,725 shares issued at July 31, 2009 and January 31, 2009, respectively 107 107 Additional paid-in capital 75,488 74,396 Treasury stock, at cost (924 and 922 shares at July 31, 2009 and January 31, 2009, respectively) (4,827) (4,826) Retained earnings 8,637 9,727 Accumulated other comprehensive income (loss) 2,518 (2,281) ----- ------ Total shareholders'' equity 81,923 77,123 ------ ------ Total liabilities and shareholders'' equity $106,810 $104,227 ======== ======== MITCHAM INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) For the Three Months For the Six Months Ended July 31, Ended July 31, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenues: Equipment leasing $4,802 $7,500 $11,128 $19,873 Lease pool equipment sales 101 1,844 170 2,405 Seamap equipment sales 7,043 3,285 9,641 8,567 Other equipment sales 731 4,866 2,343 5,184 --- ----- ----- ----- Total revenues 12,677 17,495 23,282 36,029 ------ ------ ------ ------ Cost of sales: Direct costs - equipment leasing 925 343 1,453 785 Direct costs - lease pool depreciation 4,416 3,673 8,517 7,313 Cost of lease pool equipment sales 87 1,108 97 1,232 Cost of Seamap and other equipment sales 3,917 5,257 6,111 7,957 ----- ----- ----- ----- Total cost of sales 9,345 10,381 16,178 17,287 ----- ------ ------ ------ Gross profit 3,332 7,114 7,104 18,742 Operating expenses: General and administrative 3,969 4,430 7,471 9,210 Provision for doubtful accounts 649 - 649 95 Depreciation and amortization 223 364 477 759 --- --- --- --- Total operating expenses 4,841 4,794 8,597 10,064 ----- ----- ----- ------ Operating (loss) income (1,509) 2,320 (1,493) 8,678 Other income (expenses): Interest, net (92) 223 (181) 373 Other, net 163 3 282 8 --- --- --- --- Total other income 71 226 101 381 --- --- --- --- (Loss) income before income taxes (1,438) 2,546 (1,392) 9,059 Benefit (provision) for income taxes 428 (921) 302 (3,156) --- ---- --- ------ Net (loss) income $(1,010) $1,625 $(1,090) $5,903 ======= ====== ======== ====== Net (loss) income per common share: Basic $(0.10) $0.17 $(0.11) $0.61 ------ ----- ------ ----- Diluted $(0.10) $0.16 $(0.11) $0.57 ------ ----- ------ ----- Shares used in computing net (loss) income per common share: Basic 9,797 9,764 9,790 9,758 ----- ----- ----- ----- Diluted 9,797 10,385 9,790 10,361 ----- ------ ----- ------ MITCHAM INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Six Months Ended July 31, -------- 2009 2008 ---- ---- Cash flows from operating activities: Net (loss) income $(1,090) $5,903 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 9,055 8,153 Stock-based compensation 840 1,163 Provision for doubtful accounts 649 95 Provision for inventory obsolescence (75) 249 Gross profit from sale of lease pool equipment (73) (1,173) Excess tax benefit from exercise of non-qualified stock options (7) (96) (Benefit) provision for deferred income taxes (1,210) 474 Changes in non-current income taxes payable (294) 331 Changes in working capital items: Accounts receivable 501 (1,246) Contracts receivable 267 (779) Inventories (1,677) 916 Prepaid expenses and other current assets 405 942 Income taxes receivable and payable 2,213 (1,190) Costs incurred and estimated profit in excess of billings on uncompleted contract 973 - Accounts payable, accrued expenses, other current liabilities and deferred revenue 240 (7,298) --- ------ Net cash provided by operating activities 10,717 6,444 ------ ----- Cash flows from investing activities: Purchases of seismic equipment held for lease (11,597) (15,411) Purchases of property and equipment (283) (470) Sale of used lease pool equipment 170 2,405 --- ----- Net cash used in investing activities (11,710) (13,476) ------- ------- Cash flows from financing activities: Net proceeds from line of credit 1,500 2,000 Payments on borrowings - (1,500) Proceeds from (purchases of) short-term investments 797 (1,413) Proceeds from issuance of common stock upon exercise of stock options, net of stock surrendered to pay taxes (6) 196 Excess tax benefit from exercise of non-qualified stock options 7 96 --- --- Net cash provided by (used in) financing activities 2,298 (621) Effect of changes in foreign exchange rates on cash and cash equivalents (180) (79) ---- --- Net increase (decrease) in cash and cash equivalents 1,125 (7,732) Cash and cash equivalents, beginning of period 5,063 13,884 ----- ------ Cash and cash equivalents, end of period $6,188 $6,152 ====== ====== Note A MITCHAM INDUSTRIES, INC. Reconciliation of Net (Loss) Income to EBITDA (In thousands) (Unaudited) For the Three For the Six Months Ended Months Ended July 31, July 31, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- (in thousands) (in thousands) Net (loss) income $(1,010) $1,625 $(1,090) $5,903 Interest expense (income), net 92 (223) 181 (373) Depreciation and amortization 4,670 4,077 9,055 8,153 (Benefit) provision for income taxes (428) 921 (302) 3,156 ---- --- ---- ----- EBITDA (1) 3,324 6,400 7,844 16,839 Stock-based compensation 424 527 840 1,163 --- --- --- ----- Adjusted EBITDA (1) $3,748 $6,927 $8,684 $18,002 ====== ====== ====== ======= ----------------- (1) EBITDA is defined as net income (loss) before (a) interest income, net of interest expense, (b) provision for (or benefit from) income taxes and (c) depreciation, amortization and impairment. 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 (In thousands) (Unaudited) For the Three For the Six Months Ended Months Ended July 31, July 31, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- (in thousands) (in thousands) Revenues: Equipment Leasing $5,634 $14,210 $13,641 $27,462 Seamap 7,172 3,302 9,855 8,607 Inter-segment sales (129) (17) (214) (40) ---- --- ---- --- Total revenues 12,677 17,495 23,282 36,029 ------ ------ ------ ------ Cost of sales: Equipment Leasing 6,283 8,483 12,190 12,971 Seamap 3,231 1,972 4,340 4,441 Inter-segment costs (169) (74) (352) (125) ---- --- ---- ---- Total cost of sales 9,345 10,381 16,178 17,287 ----- ------ ------ ------ Gross Profit: Equipment Leasing (649) 5,727 1,451 14,491 Seamap 3,941 1,330 5,515 4,166 Inter-segment profit 40 57 138 85 --- --- --- --- Total gross profit $3,332 $7,114 $7,104 $18,742 ====== ====== ====== =======
Mitcham Industries, Inc.
CONTACT: Billy F. Mitcham, Jr., President & CEO of Mitcham Industries,
Inc., +1-936-291-2277; or Jack Lascar or Karen Roan, both of Dennard Rupp Gray
& Easterly (DRG&E), +1-713-529-6600, for Mitcham Industries, Inc.
Web Site: http://www.mitchamindustries.com/
