Mitcham Industries Reports Fiscal 2010 Fourth Quarter and Year-end Results

HUNTSVILLE, Texas, April 7 /PRNewswire-FirstCall/ -- Mitcham Industries, Inc. (Nasdaq: MIND) (the "Company") today announced financial results for its fiscal 2010 fourth quarter and year ended January 31, 2010.  

Total revenues for the fourth quarter of fiscal 2010 increased to $17.4 million from $16.2 million in the fourth quarter of fiscal 2009.  Net income for the fourth quarter of fiscal 2010 was $0.6 million, or $0.06 per diluted share, compared to net income of $0.4 million, or $0.04 per diluted share, for the fourth quarter of fiscal 2009.  

Bill Mitcham, the Company's President and CEO, stated, "Despite the challenging operating environment, we are pleased to report another profitable quarter, strong cash flow and increased total revenues.  Our revenues for the fourth quarter increased approximately 7% from a year ago and almost 20% from the third quarter.  EBITDA for the quarter was $5.6 million compared to $4.7 million in last year's fourth quarter, an 18% increase.  Our core equipment leasing revenues were down slightly year-over-year, but our Seamap segment had another strong quarter, primarily due to scheduled shipments on our Polarcus contract as well as ongoing support activities from our installed base of GunLink and BuoyLink systems.  During the fourth quarter, we delivered one GunLink 4000 system and two BuoyLink RGPS systems to Polarcus.  

"Operationally, the Russian winter season is turning out to be better than originally anticipated, and we continue to see increased activity in other markets, particularly the Far East and South America.  However, the North American markets remain difficult as a result of reduced exploration activity and excess capacity in the seismic industry for that market.

"Although the uncertainties affecting the oil and gas industry continue, there are several positive developments that could benefit our business in fiscal 2011.  Bid activity for new seismic projects appears to be increasing in some areas.  There continues to be good demand for our three-component digital sensor units as we are seeing substantial interest in this equipment from a variety of new and existing customers.  The continuing interest in our downhole seismic tools is promising.  We also anticipate a strong performance from Seamap in fiscal 2011 as some customers have indicated plans to upgrade their GunLink and BuoyLink systems, and we have received inquiries from potential new customers for these products.  Overall, we believe we remain well positioned, operationally and financially, to make the most of current conditions, as well as an anticipated recovery."

FOURTH QUARTER FISCAL 2010 RESULTS

Total revenues for the fiscal 2010 fourth quarter increased 7% from the fourth quarter a year ago to $17.4 million, primarily due to solid sales at Seamap and sales of lease pool equipment.  Total revenues increased 19% from the third quarter of this fiscal year.  A significant portion of the Company's revenues are generated from sources outside the United States.  Revenues from international customers were approximately 71% of revenues in the fourth quarter of fiscal 2010 compared to approximately 88% of revenues during the fourth quarter of fiscal 2009.

Core revenues from equipment leasing, excluding equipment sales, were $7.5 million compared to $7.8 million in the same period a year ago, a decline of 4%, as equipment leasing revenues were negatively impacted by weak demand in North America.  Core leasing revenues declined 17% sequentially, primarily due to a large seismic survey that was conducted in North America during the third quarter of this fiscal year.

Sales of lease pool equipment were $2.3 million compared to $0.2 million in the fourth quarter of fiscal 2009.  Sales of new seismic, hydrographic and oceanographic equipment were $0.8 million compared to $2.2 million in the comparable period a year ago.  

Seamap equipment sales increased 12% to $6.7 million from $6.0 million in the comparable period a year ago.  The Company delivered one GunLink 4000 fully distributed digital gun controller system and one BuoyLink RGPS tail buoy positioning system to Polarcus for the fourth of their new-build vessels, the Altima, and a BuoyLink RGPS system for the third vessel, the Samur.  The delivery to the Samur had slipped from the third into the fourth quarter of this fiscal year.  Seamap equipment sales rose 58% from the third quarter of this fiscal year.

Gross profit in the fiscal 2010 fourth quarter was $4.9 million compared to $6.6 million in the fourth quarter of fiscal 2009.  The fiscal 2010 fourth quarter year-over-year gross profit decline was primarily attributable to lower leasing revenues, higher direct costs and higher depreciation expense related to new lease pool equipment that the Company acquired during recent periods. Gross profit margin for the fourth quarter of fiscal 2010 was 28% compared to 41% in the same period a year ago.

General and administrative ("G&A") costs for the fourth quarter of fiscal 2010 were $3.7 million compared to $4.4 million in the fourth quarter of fiscal 2009.  Operating income for the fourth quarter of fiscal 2010 was $1.0 million compared to $0.1 million in the comparable period a year ago.  Net income for the fourth quarter of fiscal 2010 was $0.6 million, or $0.06 per diluted share, compared to net income of $0.4 million, or $0.04 per diluted share, for the fourth quarter of fiscal 2009.  

EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter was $5.6 million, or 32% of total revenues, compared to $4.7 million, or 29% of total revenues, in the same period last year.  EBITDA, which is not a measure determined in accordance with generally accepted accounting principles ("GAAP"), is defined and reconciled to reported net income, the most comparable GAAP measure, in Note A under the accompanying financial tables.

FISCAL 2010 RESULTS

Total revenues for fiscal 2010 declined to $55.2 million from $66.8 million in fiscal 2009.  Core equipment leasing revenues declined 27% to $27.7 million in fiscal 2010 from $37.7 million for fiscal 2009.  Sales of lease pool equipment were $3.3 million compared to $3.0 million in fiscal 2009.  Sales of new seismic, hydrographic and oceanographic equipment for fiscal 2010 were $3.6 million versus $9.2 million in the same period a year ago.  Seamap equipment sales for fiscal 2010 increased 22% to $20.6 million from $16.9 million in fiscal 2009.

Gross profit in fiscal 2010 was $18.1 million compared to $32.6 million in fiscal 2009.  Fiscal 2010 gross profit was negatively impacted by higher operating costs and lease pool depreciation.  The higher operating costs occurred despite the decline in equipment leasing revenues for the year and were related to costs for importing additional equipment into South America and Russia, as well as the cost of sub-leased equipment.  The higher lease pool depreciation resulted from the significant additions the Company has made to its lease pool in recent periods.  Gross profit margins for fiscal 2010 and fiscal 2009 were 33% and 49%, respectively.  

G&A expenses were $15.0 million compared to $17.5 million in fiscal 2009 due to lower stock-based and incentive compensation expense and lower travel and legal expenses.  Operating income for fiscal 2010 was $0.9 million compared to operating income of $11.5 million in fiscal 2009.  The substantial decline is primarily the result of lower equipment leasing revenues and higher lease pool depreciation charges, partially offset by improved sales and gross profit from Seamap as well as lower G&A expenses.  The Company recorded a provision for income taxes of $119,000 in fiscal 2010 compared to $3.1 million in the fiscal 2009.   Net income for fiscal 2010 was $0.5 million, or $0.05 per diluted share, compared to $9.1 million, or $0.89 per diluted share, in fiscal 2009.  EBITDA for fiscal 2010 was $19.8 million, or 36% of total revenues, compared to $28.3 million, or 42% of total revenues, in fiscal 2009.  

CONFERENCE CALL

The Company has scheduled a conference call for Thursday, April 8, 2010 at 9:00 a.m. Eastern time to discuss its fiscal 2010 fourth quarter and year-end results.  To access the call, please dial (480) 6299723 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 April 15, 2010 and may be accessed by calling (303) 5903030, and using the passcode 4271192#.  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 [email protected].

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; Lima, Peru; Bogota, Colombia 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.

- Tables to follow -

SOURCE Mitcham Industries, Inc.