MIND TECHNOLOGY, INC. HUNTSVILLE, Texas, April 5, 2017 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("the Company") today announced financial results for its fiscal 2017 fourth quarter and full year ended January 31, 2017.
Total revenues for the fourth quarter of fiscal 2017 were $12.5 million compared to $11.4 million in the fourth quarter of fiscal 2016. Revenues from the Equipment Manufacturing and Sales segment increased slightly to $6.9 million in the fourth quarter, compared to $6.8 million in the same period last year. Revenues from the Equipment Leasing segment were $5.7 million in the fourth quarter compared to $4.6 million in the same period last year. The Company reported a net loss available to common shareholders of $10.0 million, or $(0.83) per share, in the fourth quarter of fiscal 2017 compared to a net loss of $26.8 million, or $(2.23) per share, in the fourth quarter of fiscal 2016.
Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation, certain non-recurring contract settlement costs, non-cash costs of lease pool equipment sales, impairment of intangible assets and non-cash foreign exchange gains and losses) for the fourth quarter of fiscal 2017 was $2.6 million compared to $0.6 million in the same period last year. For the full fiscal year 2017 Adjusted EBITDA amounted to $3.6 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 loss and cash provided by operating activities in the accompanying financial tables.
Rob Capps, Mitcham's co-Chief Executive Officer, stated, "While this was clearly a very challenging year, as our revenues declined 21% during fiscal 2017 compared to the prior year, we believe we made considerable progress in re-positioning our Company to be a more significant player in the marine industry and decreasing our exposure to oil and gas exploration activities. We are pleased to have significantly grown our equipment manufacturing and sales backlog to approximately $12.5 million as of January 31, 2017 from $8.7 million a year ago and have recently paid off all of our bank debt.
"Reviewing the financial results for fiscal 2017, the Equipment Manufacturing and Sales segment revenues were essentially flat year-over-year, which is below our expectation. This was primarily due to a delay in a number of orders that we had anticipated in the second half of the year.
"As you may recall, we recently introduced our next generation of sonar products to meet the needs of an increasing number of customers. As is often the case with new product launches, we did encounter some difficulties and delays that caused us to miss our originally projected shipment schedules. Some customers delayed orders waiting for these issues to be resolved. We believe these issues have now been resolved and we are returning to our expected delivery schedules.
"Due to the more stable nature of the non-oil and gas related contracts within our equipment and manufacturing business, we believe we now have greater visibility on our business than we have had historically. Based on our current backlog, which is nearly 50% greater than it was a year ago, and the many opportunities available worldwide, we are anticipating much stronger results in the equipment and manufacturing business for this current fiscal year, led by the aforementioned improved visibility into oceanographic, hydrographic and military opportunities. These opportunities are largely from government entities. We are not only seeing a greater number of opportunities as we continue to penetrate new markets and add new customers, but we are also seeing the scope of some of these projects become larger as well.
"While becoming a smaller piece of the overall company, our seismic equipment rental business remains an important part of Mitcham, and one that we see starting to recover from the significant downturn of the last two years. Land and marine seismic exploration activity continues to be suppressed from historical levels throughout both hemispheres, with a significant excess supply of equipment overhanging the market. However, the trend of increased bid and inquiry activity that we saw in the back half of fiscal 2017 appears to be continuing. Accordingly, we are cautiously optimistic that leasing activity will increase slowly during fiscal 2018.
"Cash flow from operating activities was about $3.2 million for fiscal year 2017 and as of April 5, 2017, we have no bank debt on our balance sheet, having recently repaid all outstanding debt under our credit facilities. Despite the major downturn that we have experienced over the past two years, we have been able to generate cash, repay debt and strengthen our capital structure.
"As we move through fiscal 2018, we expect continued slow improvement in our leasing business, but see a number of exciting opportunities for our manufacturing business. Our transformation from being solely dependent on the cyclical energy industry to pursuing opportunities in the hydrographic, oceanographic, environmental, and defense industries has not only enabled us to survive the downturn, but also leverage our engineering and manufacturing strengths and broad geographic footprint to build business that was previously unavailable to us.
"Our strategic intent going forward is to continue to diversify our sales away from sole dependence on the oil and gas industry. This will be done primarily by expanding our equipment and manufacturing business, both organically and through acquisitions, to gain a greater foothold in the global marine industry. Based on these factors, the picture has become one of greater optimism, not in small part due to our strategic repositioning of the Company as well as improved stability in the oil and gas markets."
FISCAL 2017 FOURTH QUARTER RESULTS
Revenue improvement this quarter was mainly driven by a large increase in lease pool sales compared to the same quarter a year ago. Equipment and manufacturing revenues increased 2% year-over-year, while equipment leasing revenues, excluding lease pool equipment sales, decreased 37% from the fourth quarter 2016. Total revenues for the fourth quarter of fiscal 2017 were $12.5 million compared to $11.4 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 fourth quarter of fiscal 2017 compared to approximately 91% in last year's fourth fiscal quarter.
Equipment manufacturing and sales increased to $6.9 million in the fourth quarter of fiscal 2017 compared to $6.8 million in last year's fourth quarter. The fourth quarter sales consisted of approximately $4.4 million of Seamap equipment, $1.7 million from Klein (including $0.8 million of intra-segment sales) and $1.5 million by SAP.
Equipment leasing revenues for the fourth quarter of fiscal 2017, excluding lease pool equipment sales, were $2.3 million compared to $3.7 million in the same period last year. The year-over-year decrease in fourth quarter equipment leasing revenues was primarily driven by a reduction in exploration activity due to low commodities prices.
Lease pool and other equipment sales were $3.3 million in the fourth quarter of fiscal 2017, compared to $0.9 million in the fourth quarter a year ago.
Lease pool depreciation expense in the fourth quarter of fiscal 2017 decreased to $5.8 million from $7.0 million in the same period a year ago, due to the reduction in lease pool purchases and sales of lease pool equipment in fiscal 2016 and 2017.
General and administrative expenses increased to $4.9 million in the fourth quarter of fiscal 2017 versus $4.7 million in the fourth quarter of fiscal 2016, due to the effect of the Klein acquisition partially offset by the cost reduction efforts implemented previously.
FISCAL 2017 RESULTS
Total revenues for fiscal 2017 were $41.0 million compared to $51.8 million in fiscal 2016. Equipment manufacturing and sales in fiscal 2017 were $25.1 million compared to $25.2 million in fiscal 2016. Equipment leasing revenues, excluding lease pool equipment sales, were $10.2 million in fiscal 2017 compared to $23.7 million a year ago. Lease pool and other equipment sales in fiscal 2017 were $5.8 million versus $2.9 million in fiscal 2016.
General and administrative expense increased to $20.7 million in fiscal 2017 from $19.0 million in fiscal 2016 due to the Klein acquisition, which was partially offset by the cost reduction efforts implemented during fiscal 2015 and 2016. The net loss available to common shareholders for fiscal 2017 was $33.6 million, or $(2.79) per share, compared to net a loss of $38.7 million, or $(3.22) per share in fiscal 2016. Adjusted EBITDA in fiscal 2017 was $3.6 million compared to $13.7 million in fiscal 2016.
CONFERENCE CALL
We have scheduled a conference call for Thursday, April 6, 2017 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2017 fourth quarter and full year 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 April 20, 2017 and may be accessed by calling (201) 612-7415 and using passcode 13657400#. 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.
About Mitcham Industries
Mitcham Industries, Inc. provides equipment to the geophysical, oceanographic and hydrographic industries. Headquartered in Huntsville, Texas, Mitcham has a global presence with operating locations in Salem, New Hampshire; Calgary, Canada; Brisbane, Australia; Singapore; Ufa, Bashkortostan, Russia; Budapest, Hungary; Bogota, Colombia and the United Kingdom. Mitcham's worldwide Equipment Manufacturing and Sales Segment includes its Seamap business, which designs, manufactures and sells specialized marine seismic equipment and Klein Marine Systems, Inc. which develops, manufactures and sells high performance side scan sonar systems. 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 January 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 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
Contacts: Rob Capps, Co-CEO
Mitcham Industries, Inc.
936-291-2277
Jack Lascar
Dennard Lascar Associates
713-529-6600
MITCHAM INDUSTRIES, INC,
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
January 31, 2017 January 31, 2016
---------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $2,902 $3,769
Restricted cash 609 -
Accounts and contracts receivable, net of allowance
for doubtful accounts of $3,716 and $3,633 at
January 31, 2017 and January 31, 2016, respectively 15,830 21,963
Inventories, net 11,960 12,944
Prepaid income taxes 1,565 2,523
Prepaid expenses and other current assets 2,193 1,685
----- -----
Total current assets 35,059 42,884
Seismic equipment lease pool and property and
equipment, net 43,838 73,516
Intangible assets, net 9,012 10,466
Goodwill 3,997 4,155
Deferred tax asset - 586
Long-term receivables, net of allowance for doubtful
accounts of $2,188 at January 31, 2017 and 2,780 2,784
January 31, 2016
Other assets 28 368
--- ---
Total assets $94,714 $134,759
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,929 $3,543
Current maturities - long-term debt 6,371 3,218
Deferred revenue 651 326
Accrued expenses and other current liabilities 4,514 5,369
----- -----
Total current liabilities 13,465 12,456
Deferred tax liability 317 -
Long-term debt, net of current maturities - 17,266
--- ------
Total liabilities 13,782 29,722
Shareholders' equity:
Preferred stock, $1.00 par value; 1,000 shares
authorized; 343 issued at January 31, 2017 7,294 -
Common stock $.01 par value; 20,000 shares
authorized; 14,019 shares issued at January 31,
2017 and January 31, 2016 140 140
Additional paid-in capital 121,401 120,664
Treasury stock, at cost (1,929 and 1,928 shares at
January 31, 2017 and 2016, respectively) (16,858) (16,854)
(Accumulated deficit) retained earnings (20,451) 13,188
Accumulated other comprehensive loss (10,594) (12,101)
------- -------
Total shareholders' equity 80,932 105,037
------ -------
Total liabilities and shareholders' equity $94,714 $134,759
======= ========
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three Months Ended For the Twelve Months
January 31,
Ended January 31,
-----------------
2017 2016 2017 2016
---- ----
Revenues:
Equipment manufacturing and
sales $6,865 $6,844 $25,058 $25,163
Equipment leasing 2,342 3,744 10,161 23,710
Lease pool and other
equipment sales 3,341 854 5,780 2,946
Total revenues 12,548 11,442 40,999 51,819
------ ------ ------ ------
Cost of sales:
Cost of equipment
manufacturing and sales 3,509 3,573 13,571 13,376
Direct costs -equipment
leasing 1,008 1,065 3,284 4,658
Direct costs -lease pool
depreciation 5,777 7,002 25,753 29,462
Cost of lease pool and
other equipment sales 4,923 823 5,805 1,654
Total cost of sales 15,217 12,463 48,413 49,150
------ ------ ------ ------
Gross (loss) profit (2,669) (1,021) (7,414) 2,669
Operating expenses:
General and administrative 4,949 4,747 20,727 18,966
Provision for doubtful
accounts 750 1,001 750 2,201
Contract settlement - - - 2,142
Impairment of intangible
assets - 3,609 - 3,609
Depreciation and
amortization 542 643 2,399 2,511
--- --- ----- -----
Total operating expenses 6,241 10,000 23,876 29,429
----- ------ ------ ------
Operating loss (8,910) (11,021) (31,290) (26,760)
Other income (expense):
Interest, net (104) (202) (643) (725)
Other, net 468 (940) 594 (274)
--- ---- --- ----
Total other income
(expense) 364 (1,142) (49) (999)
--- ------ --- ----
Loss before income taxes (8,546) (12,163) (31,339) (27,759)
Provision for income taxes (1,308) (14,675) (1,814) (10,977)
------ ------- ------ -------
Net loss $(9,854) $(26,838) $(33,153) $(38,736)
Preferred stock dividends (192) - (486) -
---- --- ---- ---
Net loss available to
common shareholders $(10,046) $(26,838) $(33,639) $(38,736)
Net loss per common share:
Basic $(0.83) $(2.23) $(2.79) $(3.22)
====== ====== ====== ======
Diluted $(0.83) $(2.23) $( 2.79) $(3.22)
====== ====== ======= ======
Shares used in computing net loss per common share:
Basic 12,077 12,059 12,070 12,041
Diluted 12,077 12,059 12,070 12,041
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Twelve Months
Ended January 31,
-----------------
2017 2016
---- ----
Cash flows from operating
activities:
Net loss $(33,153) $(38,736)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 28,275 32,111
Stock-based compensation 737 1,293
Impairment of intangible
assets - 3,609
Provision for doubtful
accounts, net of charge offs 750 2,201
Provision for inventory
obsolescence 75 407
Gross loss (profit) from sale
of lease pool equipment 298 (1,384)
Deferred tax expense 934 10,309
Changes in working capital
items:
Trade accounts and contracts
receivable 7,345 (238)
Inventories 850 677
Income taxes receivable and
payable 475 (1,716)
Accounts payable, accrued
expenses, other current
liabilities and deferred
revenue (2,189) 1,241
Prepaids and other current
assets, net (1,327) 4,807
Foreign exchange losses, net
of gains 84 466
--- ---
Net cash provided by
operating activities 3,154 15,047
----- ------
Cash flows from investing
activities:
Purchases of seismic
equipment held for lease (636) (2,173)
Acquisition of businesses - (10,000)
Purchases of property and
equipment (283) (336)
Sale of used lease pool
equipment 5,331 2,240
----- -----
Net cash provided by (used
in) investing activities 4,412 (10,269)
----- -------
Cash flows from financing
activities:
Net payments on revolving
line of credit (10,900) (2,600)
Payments on term loan and
other borrowings (3,217) (3,217)
Net (purchases of ) proceeds
from short term investments - 182
Preferred stock offering 7,294 -
Preferred stock dividends (486) -
Purchase of treasury stock (4) (3)
Net cash used in financing
activities (7,313) (5,638)
Effect of changes in foreign
exchange rates on cash and
cash equivalents (511) (546)
---- ----
Net change in cash and cash
equivalents (258) (1,406)
Cash and cash equivalents,
beginning of year 3,769 5,175
----- -----
Cash and cash equivalents,
end of year $3,511 $3,769
====== ======
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 Twelve Months Ended
January 31,
January 31,
2017 2016 2017 2016
---- ---- ---- ----
(in thousands) (in thousands)
Reconciliation of Net loss to EBITDA and Adjusted EBITDA
Net loss $(9,854) $(26,838) $(33,153) $(38,736)
Interest expense,
net 104 202 643 725
Depreciation and
amortization 6,348 7,679 28,275 32,111
Impairment of
intangible assets - 3,609 - 3,609
Provision for
income taxes 1,308 14,675 1,814 10,977
----- ------ ----- ------
EBITDA (1) (2,094) (673) (2,421) 8,686
Non-cash foreign
exchange (gains)
losses (369) 715 (338) 1,057
Stock-based
compensation (2) 150 208 737 1,293
Contract
settlement (2) - - - 1,781
Cost of lease pool
sales 4,865 316 5,629 856
----- --- ----- ---
Adjusted EBITDA
(1) $2,552 $566 $3,607 $13,673
====== ==== ====== =======
Reconciliation of Net cash (used in) provided by operating activities to EBITDA
Net cash (used
in) provided by
operating
activities $(533) $1,148 $3,154 $15,047
Stock-based
compensation (150) (208) (737) (1,293)
Provision for
doubtful accounts (750) (1,001) (750) (2,201)
Inventory
allowance (10) (273) (75) (407)
Changes in trade
accounts,
contracts and
notes receivable 2,963 506 (7,345) 238
Interest paid 63 156 673 694
Taxes paid, net of
refunds (296) 115 409 1,520
Gross profit
(loss) from sale
of lease pool
equipment (1,122) 357 298 1,384
Changes in
inventory (379) (1,659) (850) (677)
Changes in
accounts payable,
accrued expenses
and other current
liabilities and
deferred revenue (2,053) 1,306 2,189 (1,241)
Changes in prepaid
expenses and
other current
assets 436 (882) 1,329 (4,807)
Foreign exchange
losses, net 297 (998) (84) (466)
Other (560) 760 (632) 895
---- --- ---- ---
EBITDA (1) $(2,094) $(673) $(2,421) $8,686
======= ===== ======= ======
(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. This definition of
Adjusted EBITDA is consistent with
the definition in the Credit
Agreement. 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. The Credit Agreement
contained financial covenants based
on 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 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.
(2) Non-recurring contract settlement
costs of approximately $2.1
million include approximately $1.8
million of deferred cash payments
and approximately $300,000 of
stock
based compensation.
Mitcham Industries, Inc.
Segment Operating Results
(in thousands)
(unaudited)
For the Three Months Ended For the Twelve Months Ended
January 31, January 31,
----------- -----------
2017 2016 2017 2016
---- ---- ---- ----
(in thousands) (in thousands)
Revenues:
Equipment manufacturing
and sales $6,871 $6,761 $25,100 $25,350
Equipment leasing 5,703 4,607 15,961 26,665
Inter-segment sales (26) 74 (62) (196)
--- --- --- ----
Total revenues 12,548 11,442 40,999 51,819
------ ------ ------ ------
Cost of sales:
Equipment manufacturing
and sales 3,551 3,618 13,612 13,566
Equipment leasing 11,729 8,922 34,863 35,903
Inter-segment costs (63) (77) (62) (319)
--- --- --- ----
Total cost of sales 15,217 12,463 48,413 49,150
------ ------ ------ ------
Gross (loss) profit (2,669) (1,021) (7,414) 2,669
Operating expenses:
General and administrative 4,949 4,747 20,727 18,966
Contract settlement - - - 2,142
Impairment of intangible
assets - 3,609 - 3,609
Provision for doubtful
accounts 750 1,001 750 2,201
Depreciation and
amortization 542 643 2,399 2,511
--- --- ----- -----
Total operating expenses 6,241 10,000 23,876 29,429
----- ------ ------ ------
Operating loss $(8,910) $(11,021) $(31,290) $(26,760)
======= ======== ======== ========
Equipment Manufacturing and Sales Segment:
Revenues:
Seamap $4,423 $4,938 $14,085 $22,302
Klein 1,745 527 8,207 533
SAP 1,533 1,296 4,786 2,521
Intra-segment sales (830) - (1,978) (6)
---- --- ------ ---
6,871 6,761 25,100 25,350
Cost of sales:
Seamap 1,605 2,412 6,106 11,448
Klein 1,377 247 5,707 247
SAP 1,232 959 3,668 1,871
Intra-segment sales (663) - (1,869) -
---- --- ------ ---
3,551 3,618 13,612 13,566
----- ----- ------ ------
Gross profit $3,320 $3,143 $11,488 $11,784
====== ====== ======= =======
Gross profit margin 48% 46% 46% 46%
=== === === ===
Equipment Leasing Segment:
Revenues:
Equipment leasing $2,342 $3,753 $10,161 $23,719
Lease pool equipment sales 3,075 673 5,332 2,239
Other equipment sales 286 181 448 707
--- --- --- ---
5,703 4,607 15,941 26,665
Cost of sales:
Lease pool depreciation 5,777 7,034 25,753 29,591
Direct costs-equipment
leasing 1,008 1,065 3,284 4,658
Cost of lease pool
equipment sales 4,865 316 5,629 856
Cost of other equipment
sales 79 507 177 798
--- --- --- ---
11,729 8,922 34,843 35,903
------ ----- ------ ------
Gross loss $(6,026) $(4,315) $(18,902) $(9,238)
======= ======= ======== =======
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SOURCE Mitcham Industries, Inc.
