SAExploration Holdings, Inc. (NASDAQ:SAEX)
(OTCQB:SXPLW) today announced its consolidated financial results
for the second quarter (“Q2”) and six months (“1H”) ended June 30,
2017.
Second Quarter 2017 Summary
- Total cash balance, including restricted cash, of $25.4
million as of June 30, 2017
- Revenue of $13.6 million, compared to $57.0 million in
Q2 2016
- Gross profit (loss) of $(1.0) million, or -7.5% of
revenues, compared to $16.4 million, or 28.7% of revenues, in Q2
2016
- Adjusted gross profit, a non-GAAP measure, of $1.9
million, or 14.2% of revenues, compared to $20.5 million, or 36.0%
of revenues, in Q2 2016
- Net income (loss) attributable to the Corporation of
$(17.9) million, compared to $0.3 million in Q2 2016
- Operating cash flow of $11.7 million, compared to
$(2.8) million in Q2 2016
- Adjusted EBITDA, a non-GAAP measure, of $(3.8) million,
or -27.9% of revenues, compared to $14.3 million, or 25.1% of
revenues, in Q2 2016
- Contracted backlog of $58.8 million through 2018 and
$131.6 million of bids outstanding as of June 30,
2017
- Received additional $16.1 million of tax credit
certificates from the State of Alaska
- Reached agreement to extend maturity of $29.0 million
under senior term loan facility to January 2020
Jeff Hastings, Chairman and CEO of SAE, commented,
“The second quarter was a very difficult period for SAE. We
maintained our superior level of execution on the projects we
performed, but continue to be hampered by sparse activity, limited
visibility and tighter pricing. Despite seeing the dip in activity
beginning in the fourth quarter of last year, and despite
benefiting from a dependable winter market in Alaska and a large
ocean-bottom marine project in West Africa during the first quarter
of this year, replacing our backlog at a more consistent rate has
proven to be an arduous task in this market environment.
Furthermore, the lack of activity in our international markets has
been exacerbated by heightened competitive pressure leading to less
favorable pricing on the new projects we secure. Although it now
appears that 2017 will prove to be our most challenging year yet,
we are encouraged by the level of dialogue and interest surrounding
opportunities in 2018 and beyond. This optimism is supported by our
ability to recently add projects in Alaska and Colombia to our
backlog for 2018. One constant that cannot be inherently changed is
the perpetual need to find new sources of hydrocarbons to replace
existing production and consumption. Only producing from existing
reservoirs without replacing the depleting assets is not a
sustainable long-term strategy.”
Mr. Hastings continued, "As we continue to progress
through the second half of 2017, we expect to be active primarily
in Colombia, largely supported by our multi-year agreement with
Hocol, while also running crews in Canada. Additionally, we are
pleased to announce that our hard work and long hours requesting
and seeking the issuance of our remaining tax credit certificates
from the State of Alaska has resulted in the receipt of an
additional $16 million of tax credit certificates. We will continue
to aggressively seek means to monetize the $26 million of tax
credit certificates we currently have on-hand, while awaiting the
issuance of the remaining $43 million of tax credits currently
being processed, which we expect to be issued during the remainder
of 2017 and the beginning of 2018. After months of inaction and
uncertainty that caused potential buyers of tax credits to pause
future purchase decisions, the state legislature finally reached a
compromise on the new tax credit legislation that recently passed
that included certain amendments that could re-open the secondary
market for monetizing tax credit certificates. However, we believe
further regulatory action is needed to formalize the new
legislation, which may take time. Additionally, we believe the
State of Alaska will continue to minimize funds allocated in future
budgets to a degree that effectively eliminates any near-term
potential for monetization directly from the State of Alaska.”
Mr. Hastings concluded, “We have also been working
hard towards our goal of preserving liquidity and maximizing our
financial flexibility. In recent weeks, we have been successful at
meaningfully converting our restricted cash through exchanging our
Nigerian Naira into U.S. dollars and we expect to exchange our
remaining Naira by the end of the third quarter. Additionally, we
are pleased to announce that we have entered into an agreement with
all of the lenders under our senior term loan facility due January
2018 to extend the maturity of approximately $29 million of the
principal outstanding until January 2020. This agreement will also
amend certain terms and features of the original senior term loan
facility, including, but not limited to, the interest rate, the
make-whole provision, and the call schedule. Further details will
be provided in additional disclosures upon the successful closing
of the contemplated transaction. We view this agreement as a major
positive development for SAE, and one step towards our larger goal
of optimizing our capital structure to ensure our company is more
competitive in this new market environment.”
Second Quarter 2017 Financial
Results
Revenues decreased 76.2% to $13.6 million from
$57.0 million in Q2 2016, primarily due to a decrease in the number
or size of projects in Alaska and South America when compared to
the same period last year. Activity levels in all jurisdictions
continue to be impacted by poor market conditions due to a
sustained low commodity price environment and continued uncertainty
regarding the outlook for the oil and gas industry.
Gross loss was $(1.0) million, or -7.5% of
revenues, compared to a gross profit of $16.4 million, or 28.7% of
revenues, in Q2 2016. Gross profit (loss) for Q2 2017 and Q2 2016
included depreciation expense of $2.9 million and $4.2 million,
respectively. Gross profit excluding depreciation expense, or
adjusted gross profit, which is defined and calculated below, for
Q2 2017 was $1.9 million, or 14.2% of revenues, compared to $20.5
million, or 36.0% of revenues, in Q2 2016. Gross loss during Q2
2017 was negatively impacted by less favorable pricing on fewer
projects that generated less revenue than those performed in Q2
2016.
Selling, general and administrative (“SG&A”)
expenses during the quarter decreased 11.9% to $6.4 million, or
46.9% of revenues, compared to $7.2 million, or 12.7% of revenues,
in Q2 2016. The decrease in SG&A expenses was primarily due to
lower revenue in Q2 2017 compared to the same period last year.
However, this was partially offset by an increase in non-cash
share-based compensation expense in Q2 2017. During Q2 2017 and Q2
2016, there were approximately $0.7 million and $1.0 million,
respectively, of non-recurring or non-cash expenses included in
SG&A.
Loss before income taxes was $(17.4) million during
the quarter, compared to income before income taxes of $3.6 million
in Q2 2016. The decrease in income before income taxes was largely
due to significantly lower gross profit and higher other expense
compared to Q2 2016. During Q2 2017, other expense included, among
other items, $8.6 million of interest expense, of which,
approximately $5.3 million was non-cash amortization of loan
issuance costs and $2.3 million was interest that was paid
in-kind.
Net loss attributable to the Corporation for the
quarter was $(17.9) million, or $(1.91) per diluted share, compared
to net income attributable to the Corporation of $0.3 million, or
$1.97 per diluted share, on a reverse split-adjusted basis, in Q2
2016. Net loss was impacted by a number of factors during Q2 2017,
including:
- Lower gross profit primarily due to lower revenue;
- Higher interest expense due to the amortization of deferred
financing costs for the senior loan facility;
- A decrease in gain on foreign currency transactions; and
- An increase in foreign currency losses due to trades and
foreign currency exposure on a project in Nigeria; partially offset
by
- A decrease in SG&A expenses due to lower revenue; and
- Costs of debt restructuring incurred in Q2 2016 not repeated in
Q2 2017.
Adjusted EBITDA, which is defined and calculated
below, was $(3.8) million during the quarter, or -27.9% of
revenues, compared to $14.3 million, or 25.1% of revenues, in Q2
2016.
Capital expenditures for the quarter were $0.1
million, compared to $0.5 million in Q2 2016. The low level of
capital expenditures in both periods was primarily due to the
deteriorating conditions in the oil and gas industry, which
presented limited to no growth opportunities requiring capital
expenditures.
First Half 2017 Financial
Results
Revenues decreased 32.3% to $99.7 million from
$147.2 million in the first half of 2016. Revenues in 1H 2017
decreased significantly in North and South America due to a
decrease in active projects in these regions compared to the prior
period. In Alaska, the decrease in activity was mainly due to
changes in state legislation that created uncertainty at the
customer level with respect to their capital spending plans. The
year-over-year decrease in revenue in South America was largely
attributable to a large project in Bolivia in 1H 2016 compared to
limited activity in 1H 2017. The overall revenue decrease in 1H
2017 was partially offset by a large increase in activity in West
Africa from a large ocean-bottom marine project that was completed
during Q1 2017. Activity in Canada remained stable during 1H 2017
compared to the same period in 2016.
Gross profit decreased 43.6% to $24.1 million, or
24.2% of revenues, from $42.8 million, or 29.1% of revenues, in 1H
2016. Gross profit for 1H 2017 and 1H 2016 included depreciation
expense of $6.2 million and $8.4 million, respectively. Excluding
depreciation expense, adjusted gross profit for 1H 2017 was $30.3
million, or 30.4% of revenues, compared to $51.2 million, or 34.8%
of revenues, in the first half of 2016. The decrease in gross
profit was primarily related to the decrease in revenue from a
reduction in the number of active projects in 1H 2017 compared to
1H 2016. This was partially offset by a decrease in depreciation
expense resulting from the sale of some ocean-bottom nodal
recording equipment in the fourth quarter of 2016 and an increase
in revenue from West Africa.
SG&A expenses decreased 7.8% to $12.9 million,
or 12.9% of revenues, from $14.0 million, or 9.5% of revenues, in
the first half of 2016. The decrease in SG&A expenses was
primarily due to a decrease in revenue and a decrease in severance
costs partially offset by an increase in stock-based compensation
expense. During 1H 2017 and 1H 2016, there were approximately $1.6
million and $1.2 million, respectively, of non-recurring or
non-cash expenses included in SG&A.
Income (loss) before income taxes was $(6.8)
million, compared to $20.9 million in the first half of 2016. The
decrease in income before income taxes was largely due to a
meaningful increase in other expense. During 1H 2017, other expense
included, among other items, approximately $16.9 million of
interest expense, of which, approximately $10.5 million was
non-cash amortization of loan issuance costs and $4.5 million of
interest that was paid in-kind. Also included in other expense in
1H 2017 was a $1.0 million foreign exchange loss, compared to a
$2.4 million foreign exchange gain in the same period last
year.
Provision for income taxes was $2.2 million,
compared to $3.4 million during the first six months of 2016. The
decrease in provision for income taxes was primarily due to
fluctuations in earnings among the various jurisdictions in which
the company operates, partially offset by increases in valuation
allowances from U.S. losses and foreign tax differentials.
Net income (loss) attributable to the Corporation
was $(11.1) million, or $(1.18) per diluted share, compared to
$14.5 million, or $112.09 per diluted share, in the first half of
2016. Net loss attributable to the Corporation in 1H 2017 was
impacted by a number of factors, including:
- Lower gross profit as a result of decreased revenues;
- Higher interest expense, primarily attributable to amortization
of loan issuance costs;
- Decrease in gains on foreign currency transactions due to large
gains in 2016 related to the strengthening U.S. dollar during that
time period;
- Increase in foreign currency loss due to trades and foreign
currency exposure on a project in Nigeria; and
- Proportionately higher provision for income taxes; partially
offset by
- Lower SG&A expenses due to lower revenue; and
- Costs of debt restructuring of $2.3 million in 2016 not
repeated in 2017.
Adjusted EBITDA for the first six months decreased
50.7% to $18.9 million, or 19.0% of revenues, from $38.4 million,
or 26.1% of revenues, in 1H 2016.
Capital expenditures in 1H 2017 were $2.2 million,
compared to $0.7 million in the first half of 2016. Capital
expenditures in 1H 2017 primarily relate to the remaining cash
payments for the purchase of a set of vibrators in the fourth
quarter of 2016, as well as the purchase of additional camp
equipment and vibrators in the first quarter of 2017. Given the
state of the industry and the significant reduction in oil and gas
activity by exploration and production companies, any significant
investment in capital expenditures, particularly in large equipment
purchases, is highly unlikely until the broader market demonstrates
a consistent and sustainable recovery. Therefore, based on current
market conditions, SAE expects its total capital expenditures for
2017 will be under $5.0 million.
On June 30, 2017, cash, cash equivalents and
restricted cash totaled $25.4 million, which included $5.1 million
of restricted cash that was primarily related to exchange control
regulations in a West African country where SAE completed a
deep-water ocean-bottom marine project during Q1 2017. Also on June
30, 2017, working capital was $26.7 million, total debt at face
value, excluding net unamortized premiums or discounts, was $119.7
million, and total stockholders’ equity was $30.0 million.
Contracted Backlog
As of June 30, 2017, SAE’s backlog was $58.8
million. Bids outstanding on the same date totaled $131.6 million.
The entire backlog was comprised of land-based projects, with 64%
in South America and the remainder in North America. SAE currently
expects to complete approximately 53% of the projects in its
backlog on June 30, 2017 during the second half of 2017, with the
balance expected to be performed during 2018.
The estimations of realization from the backlog can
be impacted by a number of factors, however, including
deteriorating industry conditions, customer delays or
cancellations, permitting or project delays and environmental
conditions.
Investor Conference Call
SAE will host a conference call on Tuesday, August
22, 2017 at 10:00 a.m. Eastern Time to discuss its consolidated
financial results for the second quarter and six months ended June
30, 2017. Participants can access the conference call by dialing
(855) 433-0934 (toll-free) or (484) 756-4291 (international). SAE
will also offer a live webcast of the conference call on the
Investors section of its website at www.saexploration.com.
To listen live via the company’s website, please go
to the website at least 15 minutes prior to the start of the call
to register and download any necessary audio software. A replay of
the webcast for the conference call will be archived on the
company’s website and can be accessed by visiting the Investors
section of SAE’s website.
About SAExploration Holdings,
Inc.
SAE is an internationally-focused oilfield services
company offering a full range of vertically-integrated seismic data
acquisition and logistical support services in remote and complex
environments throughout Alaska, Canada, South America, Southeast
Asia and West Africa. In addition to the acquisition of 2D, 3D,
time-lapse 4D and multi-component seismic data on land, in
transition zones and offshore in depths reaching 3,000 meters, SAE
offers a full suite of logistical support and in-field data
processing services, such as program design, planning and
permitting, camp services and infrastructure, surveying, drilling,
environmental assessment and reclamation and community relations.
SAE operates crews around the world, performing major projects for
its blue-chip customer base, which includes major integrated oil
companies, national oil companies and large independent oil and gas
exploration companies. Operations are supported through a
multi-national presence in Houston, Alaska, Canada, Peru, Colombia,
Bolivia, Brazil and New Zealand. For more information, please visit
SAE’s website at www.saexploration.com.
The information in SAE’s website is not, and shall
not be deemed to be, a part of this notice or incorporated in
filings SAE makes with the Securities and Exchange
Commission.
Forward Looking Statements
This press release contains certain
"forward-looking statements" within the meaning of the U.S. federal
securities laws with respect to SAE. These statements can be
identified by the use of words or phrases such as “expects,”
“estimates,” “projects,” “budgets,” “forecasts,” “anticipates,”
“intends,” “plans,” “may,” “will,” “could,” “should,” “believes,”
“predicts,” “potential,” “continue,” and similar expressions. These
forward-looking statements include statements regarding SAE's
financial condition, results of operations and business and SAE's
expectations or beliefs concerning future periods and possible
future events. These statements are subject to significant known
and unknown risks and uncertainties that could cause actual results
to differ materially from those stated in, and implied by, this
press release. Risks and uncertainties that could cause actual
results to vary materially from SAE’s expectations are described
under “Risk Factors” and “Cautionary Note Regarding Forward-Looking
Statements” in SAE’s filings with the Securities and Exchange
Commission. Except as required by applicable law, SAE is not under
any obligation to, and expressly disclaims any obligation to,
update or alter its forward looking statements, whether as a result
of new information, future events, changes in assumptions or
otherwise.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except share and per share
amounts) |
|
|
|
Three Months EndedJune
30, |
|
Six Months EndedJune
30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
Revenue from
services |
|
$ |
13,559 |
|
|
$ |
57,049 |
|
|
$ |
99,728 |
|
|
$ |
147,202 |
|
Cost of services
excluding depreciation and amortization expense |
|
|
11,629 |
|
|
|
36,520 |
|
|
|
69,403 |
|
|
|
96,031 |
|
Depreciation and
amortization expense included in cost of services |
|
|
2,947 |
|
|
|
4,172 |
|
|
|
6,198 |
|
|
|
8,371 |
|
Gross
profit (loss) |
|
|
(1,017 |
) |
|
|
16,357 |
|
|
|
24,127 |
|
|
|
42,800 |
|
Selling, general and
administrative expenses |
|
|
6,358 |
|
|
|
7,213 |
|
|
|
12,875 |
|
|
|
13,959 |
|
Income
(loss) from operations |
|
|
(7,375 |
) |
|
|
9,144 |
|
|
|
11,252 |
|
|
|
28,841 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Costs
incurred on debt restructuring |
|
|
— |
|
|
|
(2,334 |
) |
|
|
— |
|
|
|
(2,334 |
) |
Interest
expense, net |
|
|
(8,561 |
) |
|
|
(4,033 |
) |
|
|
(16,919 |
) |
|
|
(8,061 |
) |
Foreign
exchange gain (loss), net |
|
|
(1,347 |
) |
|
|
813 |
|
|
|
(1,036 |
) |
|
|
2,438 |
|
Other
income (expense), net |
|
|
(72 |
) |
|
|
26 |
|
|
|
(85 |
) |
|
|
21 |
|
Total
other expense, net |
|
|
(9,980 |
) |
|
|
(5,528 |
) |
|
|
(18,040 |
) |
|
|
(7,936 |
) |
Income
(loss) before income taxes |
|
|
(17,355 |
) |
|
|
3,616 |
|
|
|
(6,788 |
) |
|
|
20,905 |
|
Provision for income
taxes |
|
|
485 |
|
|
|
2,739 |
|
|
|
2,225 |
|
|
|
3,404 |
|
Net
income (loss) |
|
|
(17,840 |
) |
|
|
877 |
|
|
|
(9,013 |
) |
|
|
17,501 |
|
Less: net income
attributable to non-controlling interest |
|
|
65 |
|
|
|
622 |
|
|
|
2,047 |
|
|
|
3,006 |
|
Net
income (loss) attributable to the Corporation |
|
$ |
(17,905 |
) |
|
$ |
255 |
|
|
$ |
(11,060 |
) |
|
$ |
14,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average basic shares outstanding |
|
|
9,358,529 |
|
|
|
129,276 |
|
|
|
9,358,529 |
|
|
|
129,272 |
|
Earnings
(loss) per share – basic |
|
$ |
(1.91 |
) |
|
$ |
1.97 |
|
|
$ |
(1.18 |
) |
|
$ |
112.13 |
|
Weighted average diluted shares outstanding |
|
9,358,529 |
|
|
|
129,276 |
|
|
|
9,358,529 |
|
|
|
129,316 |
|
Earnings
(loss) per share – diluted |
|
$ |
(1.91 |
) |
|
$ |
1.97 |
|
|
$ |
(1.18 |
) |
|
$ |
112.09 |
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands, except share and par value
amounts) |
|
|
June 30,
2017 |
|
|
December 31,
2016 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
20,238 |
|
|
$ |
11,460 |
|
Restricted cash |
|
5,114 |
|
|
|
536 |
|
Accounts
receivable, net of allowance for doubtful accounts of $12 at June
30, 2017 and December 31, 2016 |
|
44,506 |
|
|
|
69,721 |
|
Deferred
costs on contracts |
|
433 |
|
|
|
8,644 |
|
Prepaid
expenses |
|
2,523 |
|
|
|
1,977 |
|
Deferred
loan issuance costs, net |
|
10,324 |
|
|
|
— |
|
Total
current assets |
|
83,138 |
|
|
|
92,338 |
|
Property
and equipment, net of accumulated depreciation of $67,234 and
$61,444 at June 30, 2017 and December 31, 2016, respectively |
|
38,044 |
|
|
|
42,759 |
|
Intangible assets, net of accumulated amortization of $682 and $635
at June 30, 2017 and December 31, 2016, respectively |
|
697 |
|
|
|
721 |
|
Goodwill |
|
1,771 |
|
|
|
1,711 |
|
Deferred
loan issuance costs, net |
|
— |
|
|
|
20,856 |
|
Accounts
receivable, noncurrent, net of allowance for doubtful accounts of
$0 at June 30, 2017 and December 31, 2016 |
|
43,961 |
|
|
|
37,984 |
|
Deferred
income tax assets |
|
5,083 |
|
|
|
5,122 |
|
Other
assets |
|
181 |
|
|
|
164 |
|
Total
assets |
$ |
172,875 |
|
|
$ |
201,655 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
4,295 |
|
|
$ |
9,301 |
|
Accrued
liabilities |
|
10,532 |
|
|
|
12,750 |
|
Income
and other taxes payable |
|
8,707 |
|
|
|
15,605 |
|
Borrowings under revolving credit facility |
|
2,867 |
|
|
|
5,844 |
|
Borrowings under senior loan facility |
|
29,995 |
|
|
|
— |
|
Current
portion of capital leases |
|
1 |
|
|
|
56 |
|
Deferred
revenue |
|
— |
|
|
|
7,975 |
|
Total
current liabilities |
|
56,397 |
|
|
|
51,531 |
|
Borrowings under senior loan facility |
|
— |
|
|
|
29,995 |
|
Second
lien notes, net of net unamortized premium (discount) of $79 and
$96 at June 30, 2017 and December 31, 2016, respectively |
|
84,689 |
|
|
|
80,238 |
|
Senior
secured notes, net of unamortized deferred loan issuance costs of
$33 and $42 at June 30, 2017 and December 31, 2016,
respectively |
|
1,839 |
|
|
|
1,830 |
|
Total
liabilities |
|
142,925 |
|
|
|
163,594 |
|
Stockholders’ equity: |
|
|
|
|
|
Preferred
stock, $0.0001 par value, 1,000,000 authorized shares and none
outstanding |
|
— |
|
|
|
— |
|
Common
stock, $0.0001 par value, 55,000,000 shares authorized, and
9,358,529 issued and outstanding at June 30, 2017 and December 31,
2016 |
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
133,081 |
|
|
|
131,816 |
|
Accumulated deficit |
|
(103,610 |
) |
|
|
(92,550 |
) |
Accumulated other comprehensive loss |
|
(4,894 |
) |
|
|
(4,822 |
) |
Total
stockholders’ equity attributable to the Corporation |
|
24,578 |
|
|
|
34,445 |
|
Non-controlling interest |
|
5,372 |
|
|
|
3,616 |
|
Total
stockholders’ equity |
|
29,950 |
|
|
|
38,061 |
|
Total
liabilities and stockholders’ equity |
$ |
172,875 |
|
|
$ |
201,655 |
|
UNAUDITED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS) |
(In thousands) |
|
|
|
Three Months EndedJune
30, |
|
Six Months EndedJune
30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(17,840 |
) |
|
$ |
877 |
|
|
$ |
(9,013 |
) |
|
$ |
17,501 |
|
Foreign currency
translation loss |
|
|
(7 |
) |
|
|
(371 |
) |
|
|
(72 |
) |
|
|
(984 |
) |
Total comprehensive
income (loss) |
|
|
(17,847 |
) |
|
|
506 |
|
|
|
(9,085 |
) |
|
|
16,517 |
|
Less: comprehensive
income attributable to non-controlling interest |
|
|
65 |
|
|
|
622 |
|
|
|
2,047 |
|
|
|
3,006 |
|
Total
comprehensive income (loss) attributable to the Corporation |
|
$ |
(17,912 |
) |
|
$ |
(116 |
) |
|
$ |
(11,132 |
) |
|
$ |
13,511 |
|
UNAUDITED CONSOLIDATED REVENUES BY
REGION |
(In thousands) |
|
|
|
Three Months EndedJune
30, |
|
Six Months EndedJune
30, |
|
|
2017 |
|
% |
|
2016 |
|
% |
|
2017 |
|
% |
|
2016 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
1,431 |
|
10.6 |
% |
|
$ |
15,348 |
|
26.9 |
% |
|
$ |
47,795 |
|
47.9 |
% |
|
$ |
81,005 |
|
55.0 |
% |
South America |
|
|
10,724 |
|
79.1 |
% |
|
|
40,973 |
|
71.8 |
% |
|
|
12,495 |
|
12.5 |
% |
|
|
64,612 |
|
43.9 |
% |
Southeast Asia |
|
|
1,398 |
|
10.3 |
% |
|
|
728 |
|
1.3 |
% |
|
|
4,266 |
|
4.3 |
% |
|
|
1,585 |
|
1.1 |
% |
West Africa |
|
|
6 |
|
0.0 |
% |
|
|
— |
|
— |
|
|
|
35,172 |
|
35.3 |
% |
|
|
— |
|
— |
|
Total
revenue |
|
$ |
13,559 |
|
100.0 |
% |
|
$ |
57,049 |
|
100.0 |
% |
|
$ |
99,728 |
|
100.0 |
% |
|
$ |
147,202 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED RECONCILIATION OF NET INCOME
(LOSS) TO NON-GAAP ADJUSTED EBITDA(In
thousands)
We use an adjusted form of EBITDA to measure period
over period performance, which is a non-GAAP measurement. Adjusted
EBITDA is defined as net income (loss) plus depreciation and
amortization, plus interest expense, plus income taxes, plus
share-based compensation, plus (gain) loss on disposal of property
and equipment, plus costs incurred on debt restructuring, plus
foreign exchange (gain) loss, and plus non-recurring one-time
expenses. Our management uses Adjusted EBITDA as a supplemental
financial measure to assess: (i) the financial performance of our
assets without regard to financing methods, capital structures,
taxes, historical cost basis or non-recurring expenses; (ii) our
liquidity and operating performance over time in relation to other
companies that own similar assets and calculate Adjusted EBITDA in
a similar manner; and (iii) the ability of our assets to generate
cash sufficient to pay potential interest cost. We consider
Adjusted EBITDA as presented below to be the primary measure of
period-over-period changes in our operational cash flow
performance.
The terms EBITDA and Adjusted EBITDA are not
defined under GAAP, and we acknowledge that these are not measures
of operating income, operating performance or liquidity presented
in accordance with GAAP. When assessing our operating performance
or liquidity, investors and others should not consider this data in
isolation or as a substitute for net income, cash flow from
operating activities or other cash flow data calculated in
accordance with GAAP. In addition, our calculation of Adjusted
EBITDA may not be comparable to EBITDA or similarly titled measures
utilized by other companies since such other companies may not
calculate EBITDA or similarly titled measures in the same manner.
Further, the results presented by Adjusted EBITDA cannot be
achieved without incurring the costs that the measure excludes.
The computation of our Adjusted EBITDA, a non-GAAP
measure, from net income (loss), the most directly comparable GAAP
financial measure, is provided in the table below.
|
|
Three Months EndedJune
30, |
|
Six Months EndedJune
30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(17,840 |
) |
|
$ |
877 |
|
|
$ |
(9,013 |
) |
|
$ |
17,501 |
|
|
Depreciation and
amortization (1) |
|
|
3,044 |
|
|
|
4,306 |
|
|
|
6,400 |
|
|
|
8,638 |
|
|
Interest expense,
net |
|
|
8,561 |
|
|
|
4,033 |
|
|
|
16,919 |
|
|
|
8,061 |
|
|
Provision for income
taxes |
|
|
485 |
|
|
|
2,739 |
|
|
|
2,225 |
|
|
|
3,404 |
|
|
Share-based
compensation (2) |
|
|
636 |
|
|
|
178 |
|
|
|
1,265 |
|
|
|
343 |
|
|
(Gain) loss on disposal
of property and equipment, net (3) |
|
|
(87 |
) |
|
|
92 |
|
|
|
(83 |
) |
|
|
(250 |
) |
|
Costs incurred on debt
restructuring (4) |
|
|
— |
|
|
|
2,334 |
|
|
|
— |
|
|
|
2,334 |
|
|
Foreign exchange (gain)
loss, net (5) |
|
|
1,347 |
|
|
|
(813 |
) |
|
|
1,036 |
|
|
|
(2,438 |
) |
|
Non-recurring expenses
(6)(7) |
|
|
68 |
|
|
|
578 |
|
|
|
180 |
|
|
|
809 |
|
|
Adjusted
EBITDA |
|
$ |
(3,786 |
) |
|
$ |
14,324 |
|
|
$ |
18,929 |
|
|
$ |
38,402 |
|
|
(1) |
Additional depreciation and amortization expenses not related to
the cost of services were incurred during the three months ended
June 30, 2017 and 2016 in the amount of $97 and $134, respectively,
and during the six months ended June 30, 2017 and 2016 in the
amount of $202 and $267, respectively. |
(2) |
Share-based compensation primarily relates to the non-cash value of
stock options and restricted stock awards granted to the company’s
employees and directors. |
(3) |
(Gain)
loss on disposal of property and equipment, net, is primarily the
impact of sale of equipment. |
(4) |
Costs
were incurred during the second quarter of 2016 on the debt
restructuring that was completed in July 2016. |
(5) |
Foreign
exchange (gain) loss, net, includes the effect of both realized and
unrealized foreign exchange transactions. |
(6) |
Non-recurring expenses in 2017 primarily consist of severance
payments incurred at the company’s Peru and Alaska locations and
various non-operating expenses incurred at the corporate
location. |
(7) |
Non-recurring expenses in 2016 primarily consist of severance
payments incurred at the company’s Peru, Colombia, Canada, and
Alaska locations and various non-operating expenses incurred at the
corporate location. |
UNAUDITED RECONCILIATION OF GROSS PROFIT
(LOSS) TO NON-GAAP ADJUSTED GROSS PROFIT(In
thousands)
We use an adjusted form of gross profit to measure
period over period performance, which is not derived in accordance
with GAAP. Adjusted Gross Profit is defined as gross profit (loss)
plus depreciation and amortization expense related to the cost of
services. Our management uses Adjusted Gross Profit as a
substantial financial measure to assess the cost management and
performance of our projects. Within the seismic data services
industry, gross profit is presented both with and without
depreciation and amortization expense on equipment used in
operations and, therefore, we also use this measure to assess our
performance over time in relation to other companies that own
similar assets and calculate gross profit in the same manner.
The term Adjusted Gross Profit is not defined under
GAAP, and we acknowledge that it is not a measure of operating
income, operating performance or liquidity presented in accordance
with GAAP. When assessing our operating performance or liquidity,
investors and others should not consider this data in isolation or
as a substitute for gross profit calculated in accordance with
GAAP. In addition, our calculation of Adjusted Gross Profit may not
be comparable to gross profit or similarly titled measures utilized
by other companies since such other companies may not calculate
adjusted gross profit in the same manner. Further, the results
presented by Adjusted Gross Profit cannot be achieved without
incurring the costs that the measure excludes.
The computation of our Adjusted Gross Profit, a
non-GAAP measure, from gross profit (loss), the most directly
comparable GAAP financial measure, is provided in the table
below:
|
|
Three Months EndedJune
30, |
|
Six Months EndedJune
30, |
|
|
2017 |
|
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss) as
presented |
|
$ |
(1,017 |
) |
|
$ |
16,357 |
|
$ |
24,127 |
|
$ |
42,800 |
Depreciation and
amortization expense included in cost of services (1) |
|
|
2,947 |
|
|
|
4,172 |
|
|
6,198 |
|
|
8,371 |
Adjusted
gross profit |
|
$ |
1,930 |
|
|
$ |
20,529 |
|
$ |
30,325 |
|
$ |
51,171 |
(1) |
Depreciation and amortization expense included in cost of services
includes depreciation and amortization on equipment used in
operations. |
Contact
SAExploration Holdings, Inc.
Ryan Abney
Vice President, Finance
(281) 258-4409
rabney@saexploration.com
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