MIND TECHNOLOGY, INC. HUNTSVILLE, Texas, Dec. 7, 2016 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("the Company") today announced financial results for its fiscal 2017 third quarter ended October 31, 2016.
Total revenues for the third quarter of fiscal 2017 were $8.1 million compared to $15.7 million in the third quarter of fiscal 2016. Revenues from the Equipment Manufacturing and Sales segment decreased to $5.3 million in the third quarter compared to $10.1 million in the same period last year mainly due to temporary delays in certain product shipments. Revenues from the Equipment Leasing segment were $2.8 million in the third quarter compared to $5.7 million in the same period last year. The Company reported a net loss available to common shareholders of $7.5 million, or $(0.62) per share, in the third quarter of fiscal 2017 compared to a net loss of $5.8 million, or $(0.48) per share, in the third quarter of fiscal 2016. Cash flow from operating activities was approximately $0.6 million in the third quarter of fiscal 2017 compared to approximately $2.2 million in the third 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 third quarter of fiscal 2017 was a loss of $0.5 million compared to a gain of $4.6 million in the same period last year. Adjusted EBITDA for the second quarter of fiscal 2017 was a loss of $0.6 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, "Although our financial results do not reflect it, we believe that we are seeing signs of improving conditions within both segments of our business. The Equipment Manufacturing and Sales segment generated slightly lower sequential revenues in the third quarter, which was below our expectations. A number of orders that we had anticipated shipping in the third quarter were delayed due a combination of third party suppliers' inability to provide certain equipment and some internal engineering and manufacturing issues.
"We recently introduced our next generation of sonar products that meet the needs of an increasing number of non-energy 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 for some orders. We believe that all these issues have now been resolved and we have begun to ship the affected orders. Our scope of business in this market is evolving and becoming a larger part of our total business. We are pursuing a number of new opportunities with commercial and military applications, both internationally and in the United States. We anticipate a stronger finish to our fiscal year in this segment driven by scheduled deliveries and improved visibility into oceanographic and hydrographic opportunities going into next fiscal year.
"Our third quarter results reflect some improvement in our leasing business as we begin to slowly emerge from one of the deepest downturns in the industry's history. Despite the 58% sequential increase over the second quarter of this year, equipment leasing revenue remained weak as land seismic exploration activity continues to be suppressed throughout both hemispheres and significant excess capacity remains in this market.
"The sequential improvement in land leasing revenue over the second quarter of this year was led by some pick-up in activity in Latin America and our continued work in Europe. All other areas made only nominal contributions to our leasing revenues this quarter. Marine leasing activity remained soft during the third quarter due to the ongoing consolidation in the industry and the overall decline in seismic exploration activity.
"Cash flow from operating activities was about $0.6 million for the third quarter and approximately $3.7 million year-to-date. We do anticipate generating positive EBITDA in the fourth quarter of this fiscal year. We reduced our outstanding indebtedness by approximately $0.8 million during the third quarter for a total of approximately $11.8 million so far this fiscal year and anticipate making further reductions in the fourth quarter.
"We expect improvement in our fourth quarter results as compared to the third quarter. The effect of projected shipments, including those delayed from the third quarter will, we believe, result in higher revenues from our Equipment Manufacturing and Sales segment. We also expect marginal improvement in our Leasing segment. As we move into fiscal 2018 we expect continued slow improvement in our leasing business, but see a number of exciting opportunities for our manufacturing business. In fact, recently we were awarded contracts to supply equipment for two new-build vessels in Asia. These projects, which are not related to traditional seismic contractors, total approximately $7.0 million and are scheduled for delivery in fiscal 2018. Overall, our strategic intent going forward is to continue to diversify ourselves away from strict dependence on the oil and gas industry and focus on growing our Equipment and Manufacturing business that presents increasing non-energy opportunities. Our capital structure remains solid, and we believe that it positions us to make the most of the opportunities that are likely to arise from this new strategic direction."
FISCAL 2017 THIRD QUARTER RESULTS
Total revenues for the third quarter of fiscal 2017 were $8.1 million compared to $15.7 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 87% in the third quarter of fiscal 2017 compared to approximately 93% in last year's third fiscal quarter. Equipment manufacturing and sales decreased to $5.3 million in the third quarter of fiscal 2017 compared to $10.1 million in last year's third quarter. The third quarter sales consisted of approximately $2.5 million of Seamap equipment, $2.0 million from Klein (including $0.6 million of intra-segment sales) and $1.4 million by SAP.
Equipment leasing revenues for the third quarter of fiscal 2017, excluding lease pool equipment sales, were $2.6 million compared to $4.3 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 due to depressed hydrocarbon prices.
Lease pool and other equipment sales were $0.2 million in the third quarter of fiscal 2017, compared to $1.4 million in the third quarter a year ago.
Lease pool depreciation expense in the third quarter of fiscal 2017 decreased to $6.4 million from $7.2 million in the same period a year ago, due to the reduction in lease pool purchases in fiscal 2015 and 2016.
General and administrative expenses increased to $5.0 million in the third quarter of fiscal 2017 versus $4.4 million in the third quarter of fiscal 2016, due to the effect of the Klein acquisition partially offset by the cost reduction efforts implemented during fiscal 2015 and 2016.
CONFERENCE CALL
We have scheduled a conference call for Thursday, December 8 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2017 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 22, 2016 and may be accessed by calling (201) 612-7415 and using passcode 13649514#. 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. Through its Leasing Segment, Mitcham believes it is the largest independent provider of exploration equipment to the seismic industry. 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.
Certain statements and information in this press release concerning results for the quarter ended October31, 2016 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.
Contacts: Rob Capps, Co-CEO
Mitcham Industries, Inc.
936-291-2277
Jack Lascar
Dennard Lascar Associates
713-529-6600
Tables to Follow
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
October 31, January 31,
2016 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $3,232 $3,769
Accounts and contracts
receivable, net of allowance
for doubtful accounts of
$5,192 and $5,821 at October
31, 2016 and January 31,
2016, respectively 11,292 19,775
Inventories, net 12,521 12,944
Prepaid income taxes 1,656 2,523
Prepaid expenses and other
current assets 1,808 1,685
----- -----
Total current assets 30,509 40,696
Seismic equipment lease pool
and property and equipment,
net 54,192 73,516
Intangible assets, net 9,442 10,466
Goodwill 3,997 4,155
Deferred tax asset 1,206 586
Long-term receivables 4,968 4,972
Other assets 28 368
--- ---
Total assets $104,342 $134,759
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,716 $3,543
Current maturities - long-
term debt 8,676 3,218
Deferred revenue 178 326
Accrued expenses and other
current liabilities 2,094 5,369
----- -----
Total current liabilities 13,664 12,456
Long-term debt, net of
current maturities - 17,266
--- ------
Total liabilities 13,664 29,722
Shareholders' equity:
Preferred stock, $1.00 par
value; 1,000 shares
authorized; 328 issued and
outstanding 6,975 -
Common stock, $0.01 par value;
20,000 shares authorized;
14,019 shares issued at
October 31, 2016 and January
31, 2016 140 140
Additional paid-in capital 121,251 120,664
Treasury stock, at cost (1,929
and 1,928 shares at October
31, 2016 and January 31,
2016, respectively) (16,858) (16,854)
Retained earnings (accumulated
deficit) (10,405) 13,188
Accumulated other
comprehensive loss (10,425) (12,101)
------- -------
Total shareholders' equity 90,678 105,037
------ -------
Total liabilities and
shareholders' equity $104,342 $134,759
======== ========
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,
----------------- -----------------
2016 2015 2016 2015
---- ----
Revenues:
Equipment leasing $2,577 $4,271 $7,819 $19,966
Lease pool and other
equipment sales 229 1,440 2,439 2,092
Equipment manufacturing and
sales 5,251 9,970 18,193 18,319
----- ----- ------ ------
Total revenues 8,057 15,681 28,451 40,377
----- ------ ------ ------
Cost of sales:
Direct costs -equipment
leasing 739 1,175 2,276 3,593
Direct costs -lease pool
depreciation 6,428 7,241 19,976 22,460
Cost of lease pool and
other equipment sales 83 470 882 831
Cost of equipment
manufacturing and sales 2,944 5,072 10,062 9,803
----- ----- ------ -----
Total cost of sales 10,194 13,958 33,196 36,687
------ ------ ------ ------
Gross (loss) profit (2,137) 1,723 (4,745) 3,690
Operating expenses:
General and administrative 5,039 4,359 15,778 14,219
Provision for doubtful
accounts - 600 - 1,200
Contract Settlement - 2,142 - 2,142
Depreciation and
amortization 558 600 1,857 1,868
--- --- ----- -----
Total operating expenses 5,597 7,701 17,635 19,429
----- ----- ------ ------
Operating loss (7,734) (5,978) (22,380) (15,739)
Other income (expense):
Interest, net (111) (136) (539) (523)
Other, net 287 (445) 126 666
--- ---- --- ---
Total other income
(expense) 176 (581) (413) 143
--- ---- ---- ---
Loss before income taxes (7,558) (6,559) (22,793) (15,596)
Benefit (provision) for
income taxes 228 746 (506) 3,698
--- --- ---- -----
Net loss $(7,330) $(5,813) $(23,299) $(11,898)
Preferred stock dividends (180) - (294) -
---- --- ---- ---
Net loss available to
common shareholders $(7,510) $(5,813) $(23,593) $(11,898)
======= ======= ======== ========
Net loss per common share:
Basic $(0.62) $(0.48) $(1.96) $(0.99)
====== ====== ====== ======
Diluted $(0.62) $(0.48) $(1.96) $(0.99)
====== ====== ====== ======
Shares used in computing net loss per common share:
Basic 12,075 12,051 12,068 12,035
Diluted 12,075 12,051 12,068 12,035
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Nine Months
Ended October 31,
-----------------
2016 2015
---- ----
Cash flows from operating activities:
Net loss $(23,299) $(11,898)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 21,927 24,432
Stock-based compensation 587 724
Provision for inventory obsolescence 65 134
Provision for doubtful accounts, net of charge offs - 1,200
Gross profit from sale of lease pool equipment (1,420) (1,027)
Excess tax benefit from exercise of non-qualified
stock options and restricted shares - (125)
Deferred tax benefit (582) (5,285)
Changes in working capital items:
Trade accounts and contracts receivable 10,308 268
Inventories 471 (982)
Prepaid expenses and other current assets (893) 3,925
Income taxes payable 384 518
Accounts payable, accrued expenses, other current
liabilities and deferred revenue (4,242) 2,547
Foreign exchange gains net of losses 381 (532)
--- ----
Net cash provided by operating activities 3,687 13,899
----- ------
Cash flows from investing activities:
Purchases of seismic equipment held for lease (604) (2,128)
Purchases of property and equipment (117) (227)
Sale of used lease pool equipment 2,256 1,566
----- -----
Net cash provided by (used in) investing activities 1,535 (789)
----- ----
Cash flows from financing activities:
Net payments on revolving line of credit (9,400) (11,500)
Payments on term loan and other borrowings (2,414) (2,413)
Net proceeds from short-term investments - 182
Net proceeds from preferred stock offering 6,975 -
Preferred stock dividends (294) -
Purchase of treasury stock (2) (3)
Excess tax benefit from exercise of non-qualified
stock options and restricted shares - 125
--- ---
Net cash used in financing activities (5,135) (13,609)
Effect of changes in foreign exchange rates on cash
and cash equivalents (624) (110)
---- ----
Net change in cash and cash equivalents (537) (609)
Cash and cash equivalents, beginning of period 3,769 5,175
----- -----
Cash and cash equivalents, end of period $3,232 $4,566
====== ======
Supplemental cash flow information:
Interest paid $610 $538
Income taxes paid $705 $1,405
Purchases of seismic equipment held for lease in
accounts payable at end of period $160 $8
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,
----------- -----------
2016 2015 2016 2015
---- ---- ---- ----
(in thousands) (in thousands)
Reconciliation of Net loss to EBITDA and Adjusted EBITDA
Net loss $(7,330) $(5,813) $(23,299) $(11,898)
Interest expense, net 111 136 539 523
Depreciation and amortization 7,017 7,877 21,927 24,432
(Benefit) provision for income taxes (228) (746) 506 (3,698)
---- ---- --- ------
EBITDA (1) (430) 1,454 (327) 9,359
Non-cash foreign exchange losses and (gains) (288) 429 31 342
Stock-based compensation 154 566 587 1,085
Contract settlement (2) - 1,781 - 1,781
Cost of lease pool sales 51 358 764 540
--- --- --- ---
Adjusted EBITDA (1) $(513) $4,588 $1,055 $13,107
===== ====== ====== =======
Reconciliation of Net cash provided by operating activities to EBITDA
Net cash provided by operating activities $602 $2,249 $3,687 $13,899
Stock-based compensation (154) (566) (587) (1,085)
Provision for doubtful accounts - (600) - (1,200)
Provision for inventory obsolescence (22) (44) (65) (134)
Changes in trade accounts, contracts and notes receivable (1,539) 5,070 (10,308) (268)
Interest paid 106 141 610 538
Taxes paid, net of refunds 176 202 705 1,405
Gross profit from sale of lease pool equipment (36) 811 1,420 1,027
Changes in inventory (290) (2,367) (471) 982
Changes in accounts payable, accrued expenses and other current
liabilities and deferred revenue 228 (3,208) 4,242 (2,547)
Changes in prepaid expenses and other current assets 220 (33) 893 (3,925)
Foreign exchange gains net of losses 196 (488) (381) 532
Other 83 287 (72) 135
--- --- --- ---
EBITDA (1) $(430) $1,454 $(327) $9,359
===== ====== ===== ======
(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
contains 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 Nine Months Ended
October 31, July 31,
----------- --------
2016 2015 2016 2015
---- ---- ---- ----
(in thousands) (in thousands)
Revenues:
Equipment Leasing $2,806 $5,711 $10,258 $22,058
Equipment
Manufacturing and
Sales 5,251 10,127 18,229 18,589
Inter-segment sales - (157) (36) (270)
--- ---- --- ----
Total revenues 8,057 15,681 28,451 40,377
----- ------ ------ ------
Cost of sales:
Equipment Leasing 7,249 8,918 23,134 26,981
Equipment
Manufacturing and
Sales 2,887 5,123 10,062 9,948
Inter-segment costs 58 (83) - (242)
--- --- --- ----
Total cost of sales 10,194 13,958 33,196 36,687
------ ------ ------ ------
Gross (loss) profit (2,137) 1,723 (4,745) 3,690
Operating expenses:
General and
administrative 5,039 4,359 15,778 14,219
Provision for doubtful
accounts - 600 - 1,200
Contract settlement - 2,142 - 2,142
Depreciation and
amortization 558 600 1,857 1,868
--- --- ----- -----
Total operating
expenses 5,597 7,701 17,635 19,429
----- ----- ------ ------
Operating loss $(7,734) $(5,978) $(22,380) $(15,739)
======= ======= ======== ========
Equipment Leasing Segment:
Revenue:
Equipment leasing $2,577 $4,271 $7,819 $19,966
Lease pool equipment
sales 87 1,167 2,256 1,566
Other equipment sales 142 273 183 526
--- --- --- ---
2,806 5,711 10,258 22,058
Cost of sales:
Direct costs-
equipment leasing 739 1,175 2,276 3,593
Lease pool
depreciation 6,428 7,273 19,976 22,557
Cost of lease pool
equipment sales 51 358 764 540
Cost of other
equipment sales 31 112 118 291
--- --- --- ---
7,249 8,918 23,134 26,981
----- ----- ------ ------
Gross loss $(4,443) $(3,207) $(12,876) $(4,923)
======= ======= ======== =======
Equipment Manufacturing and Sales Segment:
Revenues:
Seamap $2,536 $9,976 $9,662 $17,364
Klein 1,999 - 6,462 -
SAP 1,440 151 3,253 1,225
Intra-segment sales (724) - (1,148) -
---- --- ------ ---
5,251 10,127 18,229 18,589
Cost of sales:
Seamap 1,061 5,020 4,501 9,035
Klein 1,468 - 4,330 -
SAP 1,140 103 2,436 912
Intra-segment sales (782) - (1,205) -
---- --- ------ ---
2,887 5,123 10,062 9,947
----- ----- ------ -----
Gross profit $2,364 $5,004 $8,167 $8,642
====== ====== ====== ======
Gross profit margin 45% 49% 45% 46%
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SOURCE Mitcham Industries, Inc.
