MIND MIND Technology Inc

Revenues increased 15% sequentially Equipment leasing revenues rose 88% sequentially HUNTSVILLE, Texas, Dec. 8 /PRNewswire-FirstCall/ -- Mitcham Industries, Inc. (NASDAQ:MIND) (the "Company") today announced financial results for its fiscal 2010 third quarter ended October 31, 2009. The Company's total revenues for the third quarter of fiscal 2010 were $14.5 million, approximately the same as revenues in the third quarter of fiscal 2009. Revenues increased by approximately $1.8 million when compared to revenues of $12.7 million for the second quarter of fiscal 2010. The Company reported net income of $1.0 million, or $0.10 per diluted share, for the third quarter of fiscal 2010 compared to net income of $2.7 million, or $0.27 per diluted share, for the third quarter of fiscal 2009. This compares to a net loss of $1.0 million, or $(0.10) per share for the second quarter of fiscal 2010. Fiscal 2010 third quarter results include a $730,000 charge to the Company's provision for doubtful accounts. Bill Mitcham, the Company's President and CEO, stated, "While our total revenues for the third quarter were essentially flat with a year ago, they increased on a sequential basis. Also, our core equipment leasing revenues rose substantially from the second quarter of this year despite a year over year decline. Our Seamap segment, as expected, had another solid quarter, primarily due to a scheduled shipment on our Polarcus contract and continued repair, service and spare parts sales. "Despite continuing challenges in the oil and gas industry, we see several positive developments which could benefit our business for the remainder of this fiscal year and the beginning of fiscal 2011. We are providing equipment for a number of projects in South America, and our opportunities in that region are enhanced by the opening of our new branch operations in Peru and Colombia. We also continue to see good prospects in Southeast Asia. In the third quarter, we delivered a GunLink 4000 system to Polarcus for the third of their new-build vessels, the Samur. However, delivery of the BuoyLink RGPS system for that vessel has slipped into the fourth quarter of this fiscal year. We expect to deliver GunLink 4000 and BuoyLink RGPS systems to Polarcus for a fourth vessel, the Alima, in the fourth quarter of this fiscal year. Also, prospects for the upcoming winter season in Russia are anticipated to be much better than last year based on an increasing number of inquiries, bids and signed contracts. "With the renewal of our equipment lease agreement with Sercel, which we announced last quarter, we continue as the exclusive short-term rental agent for Sercel's DSU3 digital sensor unit throughout the world, excluding China and parts of the Commonwealth of Independent States. We are seeing substantial interest in this equipment from a variety of new and existing customers. Also, under this renewed agreement, we became the exclusive short-term rental agent for all of Sercel's downhole tools in North and South America, and we are adding 24 levels of a new high temperature, high pressure Sercel downhole tool to our lease pool before the end of this month. Overall, we are seeing signs of improvement in several of our markets, especially internationally, and believe we are well positioned to capitalize on an expected recovery." THIRD QUARTER FISCAL 2010 RESULTS While total revenues for the fiscal 2010 third quarter were approximately equal to the third quarter a year ago, revenues rose 15% from the second quarter of this fiscal year, driven primarily by improved activity in North America. While activity in North America remains generally subdued, the Company benefited from providing 9,000 stations of Sercel DSU-3 digital sensors to a large survey that was conducted in the United States during the quarter. A significant portion of the Company's revenues are generated from sources outside the United States. Revenues from international customers were approximately 63% of total revenues during the third quarter of fiscal 2010, which is comparable to the same period last year. Core revenues from equipment leasing, excluding equipment sales, were $9.0 million compared to $10.0 million in the same period a year ago, a 10% year over year decline. Leasing revenues were impacted by weaker year over year demand for seismic equipment and services due to the lower level of global oil and gas exploration activity as compared to a year ago. However, core equipment leasing revenues increased 88% from the second quarter of this fiscal year as the Company benefited from a large job in the United States and improving demand in other parts of the world. Sales of new seismic, hydrographic and oceanographic equipment were $444,000 compared to $1.8 million in the comparable period a year ago, and sales of lease pool equipment were $808,000 compared to $333,000 in the third quarter of fiscal 2009. Seamap equipment sales increased 78% to $4.2 million from $2.4 million in the comparable period a year ago, primarily due to the shipment for the Polarcus Samur. Seamap sales in the third quarter of fiscal 2010 were 40% lower than in the second fiscal quarter when the shipments to Polarcus began. 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, the Nadia and the Naila, during the second quarter of this fiscal year and, as discussed above, delivered one GunLink system for the Polarcus Samur during the third fiscal quarter. Delivery of the BuoyLink RGPS system for the Samur has slipped into the fourth quarter. Total gross profit in the fiscal 2010 third quarter was $6.2 million compared to $7.3 million in the third quarter of fiscal 2009, a 15% decline. The fiscal 2010 third quarter year over year 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. Sequentially, gross profit rose 85% in the third quarter of fiscal 2010 to $6.2 million from $3.3 million in the previous quarter. Gross profit margin for the third quarter of fiscal 2010 was 42% compared to 50% in the same period a year ago and to 26% in the second quarter of this fiscal year. General and administrative ("G&A") costs for the third quarter of fiscal 2010 were $3.8 million compared to $3.9 million in the third quarter of fiscal 2009. During the third quarter, the Company recorded a $730,000 charge to provision for doubtful accounts. In the third quarter of fiscal 2009, the Company recorded a $424,000 charge to provision for doubtful accounts. Operating income for the third quarter of fiscal 2010 was $1.4 million compared to $2.7 million in the comparable period a year ago. The Company recorded provision for income taxes of $388,000 in the fiscal 2010 third quarter compared to an income tax benefit of $20,000 in the third quarter of fiscal 2009. The fiscal 2009 period includes a tax benefit of $0.9 million resulting from the elimination of uncertain tax positions upon the expiration of the period in which certain prior periods could be examined by taxing authorities. EBITDA (earnings before interest, taxes, depreciation and amortization) for the third quarter was $6.4 million, or 44% of total revenues, compared to $6.8 million, or 47% of total revenues, in the same period last year. This compares to EBITDA of $3.3 million, or 26% of total revenues, for the second quarter of fiscal 2010. Adjusted EBITDA, which excludes stock-based compensation expense, was $6.7 million, or 46% of total revenues, in the third quarter compared to $7.3 million, or 50% of total revenues, in the third quarter of last year and to $3.7 million, or 30% of total revenues, in the second quarter of this fiscal 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. YEAR TO DATE RESULTS Total revenues for the first nine months of fiscal 2010 were $37.8 million compared to $50.6 million in the first nine months of fiscal 2009. Core equipment leasing revenues were $20.2 million for the first nine months of fiscal 2010 versus $30.0 million for the first nine months of fiscal 2009. Sales of new seismic, hydrographic and oceanographic equipment for the first nine months of fiscal 2010 were $2.8 million versus $7.0 million in the same period a year ago. Sales of lease pool equipment were $978,000 compared to $2.7 million a year ago. Seamap equipment sales for the first nine months of fiscal 2010 were $13.9 million compared to $11.0 million in the first nine months of fiscal 2009. The Company reported an operating loss for the first nine months of fiscal 2010 of $80,000 compared to operating income of $11.3 million in the first nine months of fiscal 2009. Income before income taxes was $22,000 for the first nine months of fiscal 2010 compared to $11.8 million in the same period a year ago. The Company recorded a provision for income taxes of $86,000 in the first nine months of fiscal 2010 compared to $3.1 million in the same period of fiscal 2009. The Company reported a net loss for the first nine months of $64,000, or $(0.01) per share, compared to net income of $8.6 million, or $0.84 per diluted share, in the same period a year ago. EBITDA for the first nine months of fiscal 2010 was $14.2 million, or 38% of total revenues, compared to $23.6 million, or 47% of total revenues, in the first nine months of fiscal 2009. Adjusted EBITDA was $15.4 million, or 41% of total revenues, in the first nine months of fiscal 2010 compared to $25.3 million, or 50 % of total revenues, in the first nine months of last year. CONFERENCE CALL The Company has scheduled a conference call for Wednesday, December 9, 2009 at 9:00 a.m. Eastern time to discuss its fiscal 2010 third quarter results. To access the call, please dial (480) 6299722 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 December 16, 2009 and may be accessed by calling (303) 5903030, and using the passcode 4186000#. 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; 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 - 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 MITCHAM INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) October 31, January 31, 2009 2009 ----------- ----------- (unaudited) ----------- ASSETS Current assets: Cash and cash equivalents $6,400 $5,063 Restricted cash 483 969 Accounts receivable, net 15,400 12,415 Current portion of contracts receivable 872 836 Inventories, net 5,931 3,772 Costs incurred and estimated profit in excess of billings on uncompleted contract 509 1,787 Income taxes receivable - 1,000 Deferred tax asset 1,521 1,682 Prepaid expenses and other current assets 1,241 1,535 ----- ----- Total current assets 32,357 29,059 Seismic equipment lease pool and property and equipment, net 64,888 64,251 Intangible assets, net 2,742 2,744 Goodwill 4,320 4,320 Deferred tax asset 1,288 - Long-term portion of contracts receivable 3,217 3,806 Other assets 55 47 --- --- Total assets $108,867 $104,227 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $5,850 $13,561 Current maturities - long-term debt 308 - Income taxes payable 1,678 - Deferred revenue 508 424 Accrued expenses and other current liabilities 2,466 3,877 ----- ----- Total current liabilities 10,810 17,862 Non-current income taxes payable 2,972 3,260 Deferred tax liability - 32 Long-term debt, net of current maturities 11,345 5,950 ------ ----- Total liabilities 25,127 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 October 31, 2009 and January 31, 2009, respectively 107 107 Additional paid-in capital 75,460 74,396 Treasury stock, at cost (924 and 922 shares at October 31, 2009 and January 31, 2009, respectively) (4,833) (4,826) Retained earnings 9,663 9,727 Accumulated other comprehensive income (loss) 3,343 (2,281) ----- ------ Total shareholders' equity 83,740 77,123 ------ ------ Total liabilities and shareholders' equity $108,867 $104,227 ======== ======== 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, -------------------- ------------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenues: Equipment leasing $9,037 $10,043 $20,165 $29,916 Lease pool equipment sales 808 333 978 2,738 Seamap equipment sales 4,241 2,385 13,882 10,952 Other equipment sales 444 1,787 2,787 6,971 --- ----- ----- ----- Total revenues 14,530 14,548 37,812 50,577 ------ ------ ------ ------ Cost of sales: Direct costs - equipment leasing 748 810 2,201 1,595 Direct costs -lease pool depreciation 4,610 3,781 13,127 11,094 Cost of lease pool equipment sales 473 143 570 1,375 Cost of Seamap and other equipment sales 2,534 2,554 8,645 10,511 ----- ----- ----- ------ Total cost of sales 8,365 7,288 24,543 24,575 ----- ----- ------ ------ Gross profit 6,165 7,260 13,269 26,002 Operating expenses: General and administrative 3,809 3,893 11,280 13,103 Provision for doubtful accounts 730 424 1,379 519 Depreciation and amortization 213 287 690 1,046 --- --- --- ----- Total operating expenses 4,752 4,604 13,349 14,668 ----- ----- ------ ------ Operating income (loss) 1,413 2,656 (80) 11,334 Other income (expenses): Interest, net (122) 36 (303) 409 Other, net 123 29 405 37 --- --- --- --- Total other income 1 65 102 446 --- --- Income before income taxes 1,414 2,721 22 11,780 Benefit (provision) for income taxes (388) 20 (86) (3,136) ---- --- --- ------ Net (loss) income $1,026 $2,741 $(64) $8,644 ====== ====== ==== ====== Net (loss) income per common share: Basic $0.10 $0.28 $(0.01) $0.89 ===== ===== ====== ===== Diluted $0.10 $0.27 $(0.01) $0.84 ===== ===== ====== ===== Shares used in computing net (loss) income per common share: Basic 9,805 9,776 9,795 9,764 ===== ===== ===== ===== Diluted 9,969 10,188 9,795 10,303 ===== ====== ===== ====== MITCHAM INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) For the Nine Months Ended ------------------------- October 31, ----------- 2009 2008 ---- ---- Cash flows from operating activities: Net (loss) income $(64) $8,644 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 13,912 12,258 Stock-based compensation 1,119 1,691 Provision for doubtful accounts 1,379 518 Provision for inventory obsolescence 13 230 Gross profit from sale of lease pool equipment (408) (1,363) Excess tax benefit from exercise of non-qualified stock options (45) (96) Benefit from deferred income taxes (1,553) (190) Changes in non-current income taxes payable (288) (598) Changes in working capital items: Accounts receivable (2,186) (3,970) Contracts receivable (36) (88) Inventories (1,468) (601) Prepaid expenses and other current assets (268) (1,051) Income taxes receivable and payable 3,073 (390) Costs incurred and estimated profit in excess of billings on uncompleted 1,746 - contract Accounts payable, accrued expenses, other current liabilities and deferred (1,339) (4,885) revenue ------ ------ Net cash provided by operating activities 13,587 10,109 ------ ------ Cash flows from investing activities: Purchases of seismic equipment held for lease (18,828) (24,620) Purchases of property and equipment (358) (488) Sale of used lease pool equipment 978 2,738 --- ----- Net cash used in investing activities (18,208) (22,370) ------- ------- Cash flows from financing activities: Net proceeds from line of credit 5,300 8,400 Payments on borrowings - (1,500) Proceeds from (purchases of) short- term investments 871 (1,413) Proceeds from issuance of common stock upon exercise of stock options, net of (12) 184 stock surrendered to pay taxes Excess tax benefit from exercise of non-qualified stock options 45 96 --- --- Net cash provided by financing activities 6,204 5,767 Effect of changes in foreign exchange rates on cash and cash equivalents (246) (1,588) ---- ------ Net increase (decrease) in cash and cash equivalents 1,337 (8,082) Cash and cash equivalents, beginning of period 5,063 13,884 ----- ------ Cash and cash equivalents, end of period $6,400 $5,802 ====== ====== Supplemental cash flow information: Interest paid $461 $201 Income taxes paid $820 $3,314 Purchases of seismic equipment held for lease in accounts payable at end of $4,577 $4,526 period MITCHAM INDUSTRIES, INC. Reconciliation of Net (Loss) Income to EBITDA (Unaudited) For the Three Months For the Nine Months Ended Ended -------------------- ------------------- October 31, October 31, ----------- ----------- 2009 2008 2009 2008 ---- ---- ---- ---- (in thousands) (in thousands) Net (loss) income $1,026 $2,741 $(64) $8,644 Interest expense (income), net 122 (36) 303 (409) Depreciation and amortization 4,857 4,105 13,912 12,258 Provision (benefit) for income taxes 388 (20) 86 3,136 --- --- --- ----- EBITDA (1) 6,393 6,790 14,237 23,629 Stock-based compensation 279 528 1,119 1,691 --- --- ----- ----- Adjusted EBITDA (1) $6,672 $7,318 $15,356 25,320 ====== ====== ======= ======= _______________________________ (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 (unaudited) For the Three Months For the Nine Months Ended Ended -------------------- ------------------- October 31, October 31, ----------- ----------- 2009 2008 2009 2008 ---- ---- ---- ---- (in thousands) (in thousands) Revenues: Equipment Leasing $10,289 $12,163 $23,930 $39,625 Seamap 4,360 2,601 14,215 11,208 Inter-segment sales (119) (216) (333) (256) ---- ---- ---- ---- Total revenues 14,530 14,548 37,812 50,577 ------ ------ ------ ------ Cost of sales: Equipment Leasing 6,254 6,118 18,444 19,089 Seamap 2,262 1,325 6,602 5,766 Inter-segment costs (151) (155) (503) (280) ---- ---- ---- ---- Total cost of sales 8,365 7,288 24,543 24,575 ----- ----- ------ ------ Gross profit $6,165 $7,260 $13,269 $26,002 ====== ====== ======= ======= 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, Mitcham Industries, Inc. Web Site: http://www.mitchamindustries.com/

Copyright