Mitcham Industries Reports Fiscal 2018 Third Quarter Results
HUNTSVILLE, Texas, Dec. 6, 2017 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("Mitcham" or "the Company") today announced financial results for its fiscal 2018 third quarter ended October 31, 2017.
Total revenues for the third quarter of fiscal 2018 increased to $8.6 million compared to $8.1 million in the third quarter of fiscal 2017. Revenues from the Equipment Manufacturing and Sales segment increased to $6.0 million in the third quarter, compared to $5.3 million in the same period last year mainly due to increased product shipments. Revenues from the Equipment Leasing segment were $2.7 million in the third quarter compared to $2.8 million in the same period last year. The Company reported a net loss attributable to common shareholders of $5.5 million, or $(0.46) per share, in the third quarter of fiscal 2018 compared to a net loss of $7.5 million, or $(0.62) per share, in the third quarter of fiscal 2017.
Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation, non-cash costs of lease pool equipment sales and non-cash foreign exchange gains and losses) for the third quarter of fiscal 2018 was a loss of approximately $406,000 compared to a loss of approximately $513,000 in the same period last year. 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 loss and cash provided by operating activities in the accompanying financial tables.
Rob Capps, Mitcham's Co-Chief Executive Officer, stated, "As we approach the end of our fiscal year, it appears that we may have reached the bottom of this energy cycle sometime between the second and third quarter of this fiscal year. While the recovery may be slow and uneven, we are pleased to be emerging from this unprecedented downturn with a lower cost base and a stronger capital structure. Strategically, we continue to make progress in re-positioning our Company to be a more significant provider of technology to broader marine applications and are actively pursuing opportunities to expand our product offerings in this area. And in the process, we are lessening our exposure to the cyclical activity of oil and gas exploration.
"Our overall financial results for the third fiscal quarter of 2018 were very similar to our second fiscal quarter. The Equipment Manufacturing and Sales segment delivered incremental improvement over last year's third quarter, and we currently anticipate a stronger fourth quarter in this segment driven by improving visibility into oceanographic and hydrographic opportunities, especially in Asia. We are experiencing an increase in inquiries and order bookings driven by multi-year program opportunities within the defense and maritime security industries.
"Land and marine seismic exploration activity continued to be depressed during the third quarter. However, we are starting to see an increase in the number of inquiries and bid opportunities. We are anticipating that this segment should deliver a stronger fourth quarter led by seasonal winter activity in certain markets as well as some renewed land and marine seismic activity in North and South America.
"Our capital structure remains very strong with no debt on our balance sheet and ample liquidity, with cash and cash equivalents of $6.5 million as of October 31, 2017. Year-to-date, we generated over $2.2 million of operating cash flow.
"Strategically, we are undergoing a material change in our leasing business model. By implementing an asset-light strategy that enables us to monetize certain lease pool assets and make more effective use of our rental partnership agreements, we can lessen our exposure to the more cyclical oil and gas exploration industry. This new paradigm allows us to redeploy capital to expand our offerings in the equipment manufacturing side of our business, mainly marine technology, while opening new commercial opportunities within the leasing segment."
FISCAL 2018 THIRD QUARTER RESULTS
Total revenues for the third quarter of fiscal 2018 increased 7%, driven mainly by an increase in equipment manufacturing and sales compared to last year's third quarter. Equipment and manufacturing sales increased 13% year-over-year, while equipment leasing revenues, excluding lease pool equipment sales, decreased 20% from the third quarter of fiscal 2017. Total revenues for the third quarter of fiscal 2018 rose to $8.6 million compared to $8.1 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 83% in the third quarter of fiscal 2018 compared to approximately 87% in last year's third fiscal quarter.
Equipment manufacturing and sales increased to $6.0 million in the third quarter of fiscal 2018 compared to $5.3 million in last year's third quarter. The third quarter sales consisted of approximately $3.7 million of Seamap equipment, $1.5 million from Klein (including $0.3 million of intra-segment sales) and $1.1 million by SAP.
Equipment leasing revenues for the third quarter of fiscal 2018, excluding lease pool equipment sales, were $2.1 million compared to $2.6 million in the same period last year. The year-over-year decrease in third quarter equipment leasing revenues was primarily driven by a reduction in exploration activity and an excess supply of equipment.
Lease pool and other equipment sales were $0.6 million in the third quarter of fiscal 2018, compared to $0.2 million in the third quarter a year ago.
Lease pool depreciation expense in the third quarter of fiscal 2018 decreased to $3.6 million from $6.4 million in the same period a year ago, due to the reduction in lease pool purchases over the past three years as a well as an increase in lease pool sales.
General and administrative expenses increased slightly to $5.2 million in the third quarter of fiscal 2018 versus $5.0 million in the third quarter of fiscal 2017, due to an increase in business development activities.
CONFERENCE CALL
We have scheduled a conference call for Thursday, December 7 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2018 third 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 December 21, 2017 and may be accessed by calling (201) 612-7415 and using passcode 13673442#. 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 Investor Relations (713) 529‑6600 or email [email protected].
About Mitcham Industries
Mitcham Industries, Inc. provides technology to the oceanographic, hydrographic, defense, seismic and security industries. Headquartered in Huntsville, Texas, Mitcham has a global presence with operating locations in the United States, Canada, Australia, Singapore, Russia, Hungary, Colombia and the United Kingdom. Mitcham's worldwide Equipment Manufacturing and Sales Segment, which includes its Seamap and Klein Marine Systems units, designs, manufactures and sells specialized, high performance, marine sonar and seismic equipment. Through its Leasing Segment, Mitcham believes it is the largest independent provider of exploration equipment to the seismic industry.
Certain statements and information in this press release concerning results for the quarter ended October 31, 2017 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 publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
| Contacts: |
Rob Capps, Co-CEO |
| Mitcham Industries, Inc. |
|
| 936-291-2277 |
|
| Jack Lascar / Mark Roberson |
|
| Dennard Lascar Investor Relations |
|
| 713-529-6600 |
Tables to Follow
| MITCHAM INDUSTRIES, INC. |
||||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
| (in thousands, except per share data) |
||||
| (unaudited) |
||||
| October 31, |
January 31, |
|||
| 2017 |
2017 |
|||
| ASSETS |
||||
| Current assets: |
||||
| Cash and cash equivalents |
$6,541 |
$2,902 |
||
| Restricted Cash |
229 |
609 |
||
| Accounts and contracts receivable, net of allowance for doubtful accounts of 2,965 and $3,716 at October 31, 2017 and January 31, 2017, respectively |
12,165 |
15,830 |
||
| Inventories, net |
11,940 |
11,960 |
||
| Prepaid income taxes |
- |
1,565 |
||
| Prepaid expenses and other current assets |
2,135 |
2,193 |
||
| Total current assets |
33,010 |
35,059 |
||
| Seismic equipment lease pool and property and equipment, net |
26,372 |
43,838 |
||
| Intangible assets, net |
8,151 |
9,012 |
||
| Goodwill |
3,997 |
3,997 |
||
| Non-current prepaid income taxes |
1,167 |
- |
||
| Long-term receivables net of allowance for doubtful accounts of $2,188 at October 31, 2017 and January 31, 2017 |
4,071 |
2,780 |
||
| Other assets |
29 |
28 |
||
| Total assets |
$76,797 |
$94,714 |
||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
| Current liabilities: |
||||
| Accounts payable |
2,118 |
1,929 |
||
| Current maturities – long-term debt |
- |
6,371 |
||
| Deferred revenue |
236 |
651 |
||
| Income taxes payable |
329 |
|||
| Accrued expenses and other current liabilities |
3,669 |
4,514 |
||
| Total current liabilities |
6,352 |
13,465 |
||
| Deferred tax liability |
296 |
317 |
||
| Total liabilities |
6,648 |
13,782 |
||
| Shareholders' equity: |
||||
| Preferred stock, $1.00 par value; 1,000 shares authorized; 425 and 343 shares issued and outstanding at October 31, 2017 and January 31, 2017, respectively |
9,144 |
7,294 |
||
| Common stock, $0.01 par value; 20,000 shares authorized; 14,019 shares issued at October 31, 2017 and January 31, 2017 |
140 |
140 |
||
| Additional paid-in capital |
122,087 |
121,401 |
||
| Treasury stock, at cost (1,929 shares at October 31, 2017 and January 31, 2017) |
(16,858) |
(16,858) |
||
| Accumulated deficit |
(34,391) |
(20,451) |
||
| Accumulated other comprehensive loss |
(9,973) |
(10,594) |
||
| Total shareholders' equity |
70,149 |
80,932 |
||
| Total liabilities and shareholders' equity |
$76,797 |
$94,714 |
||
| MITCHAM INDUSTRIES, INC. |
||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
| (in thousands, except per share data) |
||||||||
| (unaudited) |
||||||||
| For the Three Months |
For the Nine Months |
|||||||
| Ended October 31, |
Ended October 31, |
|||||||
| 2017 |
2016 |
2017 |
2016 |
|||||
| Revenues: |
||||||||
| Equipment manufacturing and sales |
$5,955 |
$5,251 |
$22,429 |
$18,193 |
||||
| Equipment leasing |
2,071 |
2,577 |
5,765 |
7,819 |
||||
| Lease pool and other equipment sales |
618 |
229 |
9,719 |
2,439 |
||||
| Total revenues |
8,644 |
8,057 |
37,913 |
28,451 |
||||
| Cost of sales: |
||||||||
| Cost of equipment manufacturing and sales |
3,132 |
2,944 |
12,975 |
10,062 |
||||
| Direct costs - equipment leasing |
822 |
739 |
2,306 |
2,276 |
||||
| Direct costs - lease pool depreciation |
3,578 |
6,428 |
11,509 |
19,976 |
||||
| Cost of lease pool and other equipment sales |
211 |
83 |
6,410 |
882 |
||||
| Total cost of sales |
7,743 |
10,194 |
33,200 |
33,196 |
||||
| Gross (loss) profit |
901 |
(2,137) |
4,713 |
(4,745) |
||||
| Operating expenses: |
||||||||
| General and administrative |
5,178 |
5,039 |
15,145 |
15,778 |
||||
| Depreciation and amortization |
516 |
558 |
1,622 |
1,857 |
||||
| Total operating expenses |
5,694 |
5,597 |
16,767 |
17,635 |
||||
| Operating loss |
(4,793) |
(7,734) |
(12,054) |
(22,380) |
||||
| Other income (expense): |
||||||||
| Interest, net |
52 |
(111) |
23 |
(539) |
||||
| Other, net |
46 |
287 |
(107) |
126 |
||||
| Total other income (expense) |
98 |
176 |
(84) |
(413) |
||||
| Loss before income taxes |
(4,695) |
(7,558) |
(12,138) |
(22,793) |
||||
| (Provision) benefit for income taxes |
(586) |
228 |
(1,172) |
(506) |
||||
| Net loss |
($5,281) |
($7,330) |
($13,310) |
($23,299) |
||||
| Preferred stock dividends |
(229) |
(180) |
(630) |
(294) |
||||
| Net loss available to common shareholders |
($5,510) |
($7,510) |
($13,940) |
($23,593) |
||||
| Net loss per common share: |
||||||||
| Basic |
($0.46) |
($0.62) |
($1.15) |
($1.96) |
||||
| Diluted |
($0.46) |
($0.62) |
($1.15) |
($1.96) |
||||
| Shares used in computing net loss per common share: |
||||||||
| Basic |
12,087 |
12,075 |
12,082 |
12,068 |
||||
| Diluted |
12,087 |
12,075 |
12,082 |
12,068 |
||||
| MITCHAM INDUSTRIES, INC. |
||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
| (in thousands) |
||||
| (unaudited) |
||||
| For the Nine Months |
||||
| Ended October 31, |
||||
| 2017 |
2016 |
|||
| Cash flows from operating activities: |
||||
| Net loss |
(13,310) |
(23,299) |
||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||
| Depreciation and amortization |
13,219 |
21,927 |
||
| Stock-based compensation |
685 |
587 |
||
| Provision for inventory obsolescence |
58 |
65 |
||
| Gross profit from sale of lease pool equipment |
(3,080) |
(1,420) |
||
| Deferred tax benefit |
(31) |
(582) |
||
| Changes in working capital items: |
||||
| Trade accounts and contracts receivable |
5,129 |
10,308 |
||
| Inventories |
79 |
471 |
||
| Prepaid expenses and other current assets |
207 |
(893) |
||
| Income taxes payable |
714 |
384 |
||
| Accounts payable, accrued expenses, other current liabilities and deferred revenue |
(1,244) |
(4,242) |
||
| Foreign exchange gains net of losses |
(252) |
381 |
||
| Net cash provided by operating activities |
2,174 |
3,687 |
||
| Cash flows from investing activities: |
||||
| Purchases of seismic equipment held for lease |
(321) |
(604) |
||
| Purchases of property and equipment |
(276) |
(117) |
||
| Sale of used lease pool equipment |
6,690 |
2,256 |
||
| Net cash provided by investing activities |
6,093 |
1,535 |
||
| Cash flows from financing activities: |
||||
| Net payments on revolving line of credit |
(3,500) |
(9,400) |
||
| Payments on term loan and other borrowings |
(2,807) |
(2,414) |
||
| Net proceeds from preferred stock offering |
1,847 |
6,975 |
||
| Preferred stock dividends |
(630) |
(294) |
||
| Purchase of Treasury Stock |
- |
(2) |
||
| Net cash used in financing activities |
(5,090) |
(5,135) |
||
| Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash |
82 |
(624) |
||
| Net change in cash, cash equivalents and restricted cash |
3,259 |
(537) |
||
| Cash, cash equivalents and restricted cash, beginning of period |
3,511 |
3,769 |
||
| Cash, cash equivalents and restricted cash, end of period |
$6,770 |
$3,232 |
||
| Supplemental cash flow information: |
||||
| Interest paid |
$84 |
$610 |
||
| Income taxes paid |
$436 |
$705 |
||
| Purchases of seismic equipment held for lease in accounts payable at end of period |
$65 |
$160 |
||
| MITCHAM INDUSTRIES, INC. |
||||||||
| Reconciliation of Net Loss and Net Cash Provided by Operating Activities to |
||||||||
| EBITDA and Adjusted EBITDA |
||||||||
| For the Three Months Ended |
For the Nine Months Ended |
|||||||
| October 31, |
October 31, |
|||||||
| 2017 |
2016 |
2017 |
2016 |
|||||
| (in thousands) |
(in thousands) |
|||||||
| Reconciliation of Net loss to EBITDA and Adjusted EBITDA |
||||||||
| Net loss |
$ (5,281) |
$ (7,330) |
$ (13,310) |
$ (23,299) |
||||
| Interest (income) expense, net |
(52) |
111 |
(23) |
539 |
||||
| Depreciation and amortization |
4,124 |
7,017 |
13,219 |
21,927 |
||||
| Provision (benefit) for income taxes |
586 |
(228) |
1,172 |
506 |
||||
| EBITDA (1) |
(623) |
(430) |
1,058 |
(327) |
||||
| Non-cash foreign exchange (gains) losses |
(41) |
(288) |
320 |
31 |
||||
| Stock based compensation |
224 |
154 |
685 |
587 |
||||
| Cost of lease pool sales |
34 |
51 |
6,228 |
764 |
||||
| Adjusted EBITDA (1) |
(406) |
(513) |
8,291 |
1,055 |
||||
| Reconciliation of Net Cash Provided by Operating Activities to EBITDA |
||||||||
| Net cash (used in) provided by operating activities |
(1,912) |
602 |
2,174 |
3,687 |
||||
| Stock-based compensation |
(224) |
(154) |
(685) |
(587) |
||||
| Provision for inventory obsolescence |
9 |
(22) |
(58) |
(65) |
||||
| Changes in trade accounts, contracts and notes receivable |
748 |
(1,539) |
(5,129) |
(10,308) |
||||
| Interest (received) paid |
(36) |
106 |
84 |
610 |
||||
| Taxes paid, net of refunds |
277 |
176 |
436 |
705 |
||||
| Gross profit (loss) from sale of lease pool equipment |
228 |
(36) |
3,080 |
1,420 |
||||
| Changes in inventory |
(186) |
(290) |
(79) |
(471) |
||||
| Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue |
315 |
228 |
1,244 |
4,242 |
||||
| Changes in prepaid expenses and other current assets |
(6) |
220 |
(207) |
893 |
||||
| Foreign exchange gains net of losses |
181 |
196 |
252 |
(381) |
||||
| Other |
(17) |
83 |
(54) |
(72) |
||||
| EBITDA (1) |
(623) |
(430) |
1,058 |
(327) |
||||
| (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 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 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 |
For the Nine Months |
|||||||
| Ended October 31, |
Ended October 31, |
|||||||
| 2017 |
2016 |
2017 |
2016 |
|||||
| Revenues: |
||||||||
| Equipment Manufacturing and Sales |
$5,992 |
$5,251 |
$22,565 |
$18,229 |
||||
| Equipment Leasing |
2,730 |
2,806 |
15,546 |
10,258 |
||||
| Inter-segment sales |
(78) |
- |
(198) |
(36) |
||||
| Total revenues |
$8,644 |
$8,057 |
$37,913 |
$28,451 |
||||
| Cost of sales: |
||||||||
| Equipment Manufacturing and Sales |
3,174 |
2,887 |
13,116 |
10,062 |
||||
| Equipment Leasing |
4,647 |
7,249 |
20,282 |
23,134 |
||||
| Inter-segment costs |
(78) |
58 |
(198) |
- |
||||
| Total cost of sales |
7,743 |
10,194 |
33,200 |
33,196 |
||||
| Gross profit (loss) |
901 |
(2,137) |
4,713 |
(4,745) |
||||
| Operating expenses: |
||||||||
| General and administrative |
5,178 |
5,039 |
15,145 |
15,778 |
||||
| Depreciation and amortization |
516 |
558 |
1,622 |
1,857 |
||||
| Total operating expenses |
5,694 |
5,597 |
16,767 |
17,635 |
||||
| Operating loss |
($4,793) |
($7,734) |
($12,054) |
($22,380) |
||||
| Equipment Manufacturing and Sales Segment: |
||||||||
| Revenues: |
||||||||
| Seamap |
$3,676 |
$2,536 |
$16,053 |
$9,662 |
||||
| Klein |
1,517 |
1,999 |
3,456 |
6,462 |
||||
| SAP |
1,087 |
1,440 |
3,998 |
3,253 |
||||
| Intra-segment sales |
(288) |
(724) |
(942) |
(1,148) |
||||
| 5,992 |
5,251 |
22,565 |
18,229 |
|||||
| Cost of sales: |
||||||||
| Seamap |
1,671 |
1,061 |
8,438 |
4,501 |
||||
| Klein |
894 |
1,468 |
2,571 |
4,330 |
||||
| SAP |
896 |
1,140 |
3,158 |
2,436 |
||||
| Intra-segment sales |
(287) |
(782) |
(1,051) |
(1,205) |
||||
| 3,174 |
2,887 |
13,116 |
10,062 |
|||||
| Gross profit |
$2,818 |
$2,364 |
$9,449 |
$8,167 |
||||
| Gross profit margin |
47% |
45% |
42% |
45% |
||||
| Equipment Leasing Segment: |
||||||||
| Revenue: |
||||||||
| Equipment leasing |
$2,071 |
$2,577 |
$5,765 |
$7,819 |
||||
| Lease pool equipment sales |
247 |
87 |
9,309 |
2,256 |
||||
| Other equipment sales |
412 |
142 |
472 |
183 |
||||
| $2,730 |
$2,806 |
$15,546 |
$10,258 |
|||||
| Cost of sales: |
||||||||
| Direct costs-equipment leasing |
858 |
739 |
2,363 |
2,276 |
||||
| Lease pool depreciation |
3,578 |
6,428 |
11,509 |
19,976 |
||||
| Cost of lease pool equipment sales |
33 |
51 |
6,228 |
764 |
||||
| Cost of other equipment sales |
178 |
31 |
182 |
118 |
||||
| 4,647 |
7,249 |
20,282 |
23,134 |
|||||
| Gross loss |
($1,917) |
($4,443) |
($4,736) |
($12,876) |
||||
SOURCE Mitcham Industries, Inc.
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