- Excluding special items, Company reports net loss of $0.05 per
share - Branches established in Peru and Colombia - Company renews
and expands its exclusive agreement with Sercel HUNTSVILLE, Texas,
Sept. 8 /PRNewswire-FirstCall/ -- Mitcham Industries, Inc.
(NASDAQ:MIND) (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 . 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 ====== ====== ====== ======= DATASOURCE:
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/
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