HOUSTON, May 1, 2019 /PRNewswire/ -- ION Geophysical
Corporation (NYSE: IO) today reported revenues of $37.0 million in the first quarter 2019, a 10%
increase compared to revenues of $33.5
million one year ago, driven in part by an increase in data
library sales and Marlin™ deployments. ION's net loss was
$21.4 million, or $(1.52) per share, compared to a net loss of
$18.4 million, or $(1.44) per share in the first quarter 2018.
The Company reported Adjusted EBITDA of $(4.6) million for the first quarter 2019, a
decrease from the Adjusted EBITDA of $(1.1)
million one year ago. A reconciliation of Adjusted
EBITDA to the closest comparable GAAP numbers can be found in the
tables of this press release.
Net cash flows from operations were $15.4
million during the first quarter 2019, compared to
$0.6 million in the first quarter
2018. Total net cash flows, including investing and financing
activities, were $5.0 million,
compared to $(1.3) million one year
ago. At March 31, 2019, the
Company had total liquidity of $78.1
million, consisting of $38.4
million of cash on hand, and $39.7
million of available borrowing capacity under its
$50.0 million revolving credit
facility, of which nothing was drawn.
Brian Hanson, ION's President and
Chief Executive Officer, commented, "I'm pleased with the
start to the year given the uncertain market outlook many of our
E&P clients had in December due to oil price volatility.
While 2019 E&P spending levels are projected to be slightly up,
it remains unclear how robust exploration activity and funding will
be in 2019. However, we are cautiously optimistic given the
uptick in new venture interest we're seeing.
"We continue to believe market fundamentals will gradually
improve as it becomes increasingly critical to meet production
demand in the next decade. Oil and gas projections suggest
continued demand growth may create a supply gap in the middle of
the next decade that shale may be unable to meet, necessitating
offshore deepwater exploration and development. Due to the
time it takes to develop and start producing oil and gas from new
discoveries offshore, there's an increasing need to reinvest in
conventional resources offshore to meet demand in the middle of the
next decade.
"Near-term, however, we expect exploration spending will remain
very focused, with the majority of data sales tied to license
rounds closing this year. We remain focused on an increase in
new multi-client program development, commercialization of our 4Sea
next generation ocean bottom technology and greater adoption of
Marlin offshore operations optimization software in both E&P
and adjacent markets."
FIRST QUARTER 2019
The Company's segment revenues for the first quarter were as
follows (in thousands):
|
|
Three Months Ended
March 31,
|
|
|
|
|
2019
|
|
2018
|
|
% Change
|
E&P Technology
& Services
|
|
$
|
27,103
|
|
|
$
|
24,568
|
|
|
10
|
%
|
Operations
Optimization
|
|
9,853
|
|
|
8,940
|
|
|
10
|
%
|
Total
|
|
$
|
36,956
|
|
|
$
|
33,508
|
|
|
10
|
%
|
Within the E&P Technology & Services segment,
multi-client revenues were $23.4
million, an increase of 19%, with data library revenues
increasing 67% and new venture revenues essentially flat compared
to the first quarter 2018. The increase in data library
revenues was primarily attributable to higher sales of recently
completed 3D reimaging programs and existing 2D data offshore
Brazil. Imaging Services revenues were $3.7 million, a decrease of 25%. While
Imaging Services revenues declined, a significant number of new
projects closed during the quarter, increasing Imaging Services
backlog to its highest level since 2015. This increase in
backlog should lead to an increase in Imaging Services revenues
during the remainder of 2019.
Within the Operations Optimization segment, Optimization
Software & Services revenues were $5.0
million, a 5% increase from the first quarter 2018.
The increase in Optimization Software & Services revenues was
due to an increase in engineering services revenues, primarily
driven by the continued increase in market adoption and deployments
of ION's Marlin offshore operations optimization software.
Devices revenues were $4.8 million, a
16% increase from the first quarter 2018, driven by an increase in
repairs.
Consolidated gross margin for the quarter was 27%, compared to
20% in the first quarter 2018. Gross margin in E&P
Technology & Services was 20%, compared to 18% one year
ago. The slight increase in E&P Technology & Services
gross margin was a result of the increase and mix of data library
revenues. Operations Optimization gross margin was 46%,
compared to 48% one year ago. The slight decline in
Operations Optimization gross margin was due to the mix of revenues
between Devices and Optimization Software & Services.
Consolidated operating expenses were $25.8 million, compared to $19.5 million in the first quarter 2018.
Operating margin was (43)%, compared to (38)% in the first quarter
2018. This increase in operating expenses and decline in
operating margin was due in part to an increase in compensation
expense related to the Company's outstanding stock appreciation
rights (SARs). Outstanding SARs are measured and adjusted to
their fair value each quarter until exercised. During the
first quarter 2019, the Company recorded $4.5 million of SARs expenses compared to
$1.2 million in first quarter
2018.
CONFERENCE CALL
The Company has scheduled a conference call for Thursday, May 2, 2019, at 10:00 a.m. Eastern Time that will include a slide
presentation to be posted in the Investor Relations section of the
ION website by 9:00 a.m. Eastern
Time. To participate in the conference call, dial
(877) 407-0672 at least 10 minutes before the call begins and ask
for the ION conference call. A replay of the call will be
available approximately two hours after the live broadcast ends and
will be accessible until May 16,
2019. To access the replay, dial (877) 660-6853 and use pass
code 13689014#.
Investors, analysts and the general public will also have the
opportunity to listen to the conference call live over the Internet
by visiting www.iongeo.com. An archive of the webcast will be
available shortly after the call on the Company's website.
About ION
ION develops and leverages innovative technologies, creating
value through data capture, analysis and optimization to enhance
critical decision-making, enabling superior returns. For more
information, visit iongeo.com.
Contact
Steve Bate
Executive Vice President and Chief Financial Officer
+1.281.552.3011
The information herein contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements may include information and other
statements that are not of historical fact. Actual results may vary
materially from those described in these forward-looking
statements. All forward-looking statements reflect numerous
assumptions and involve a number of risks and uncertainties. These
risks and uncertainties include the risks associated with the
timing and development of ION Geophysical Corporation's products
and services; pricing pressure; decreased demand; changes in oil
prices; and political, execution, regulatory, and currency risks.
These risks and uncertainties also include risks associated with
the WesternGeco litigation and other related proceedings. We cannot
predict the outcome of this litigation or the related proceedings.
For additional information regarding these various risks and
uncertainties, including the WesternGeco litigation, see our Form
10-K for the year ended December 31,
2018, filed on February 7,
2019. Additional risk factors, which could affect actual
results, are disclosed by the Company in its fillings with the
Securities and Exchange Commission ("SEC"), including its Form
10-K, Form 10-Qs and Form 8-Ks filed during the year. The Company
expressly disclaims any obligation to revise or update any
forward-looking statements.
Tables to follow
ION GEOPHYSICAL
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
Service
revenues
|
$
|
28,128
|
|
|
$
|
25,086
|
|
Product
revenues
|
8,828
|
|
|
8,422
|
|
Total net
revenues
|
36,956
|
|
|
33,508
|
|
Cost of
services
|
22,446
|
|
|
22,329
|
|
Cost of
products
|
4,598
|
|
|
4,326
|
|
Gross
profit
|
9,912
|
|
|
6,853
|
|
Operating
expenses:
|
|
|
|
Research, development
and engineering
|
5,357
|
|
|
4,255
|
|
Marketing and
sales
|
5,793
|
|
|
5,098
|
|
General,
administrative and other operating expenses
|
14,699
|
|
|
10,140
|
|
Total operating
expenses
|
25,849
|
|
|
19,493
|
|
Loss from
operations
|
(15,937)
|
|
|
(12,640)
|
|
Interest expense,
net
|
(3,112)
|
|
|
(3,836)
|
|
Other expense,
net
|
(792)
|
|
|
(791)
|
|
Loss before income
taxes
|
(19,841)
|
|
|
(17,267)
|
|
Income tax
expense
|
1,407
|
|
|
1,072
|
|
Net loss
|
(21,248)
|
|
|
(18,339)
|
|
Net income
attributable to noncontrolling interest
|
(112)
|
|
|
(87)
|
|
Net loss attributable
to ION
|
$
|
(21,360)
|
|
|
$
|
(18,426)
|
|
Net loss per
share:
|
|
|
|
Basic
|
$
|
(1.52)
|
|
|
$
|
(1.44)
|
|
Diluted
|
$
|
(1.52)
|
|
|
$
|
(1.44)
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
Basic
|
14,033
|
|
|
12,813
|
|
Diluted
|
14,033
|
|
|
12,813
|
|
ION GEOPHYSICAL
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(In
thousands)
|
(Unaudited)
|
|
ASSETS
|
March 31,
2019
|
|
December 31,
2018
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
38,407
|
|
|
$
|
33,551
|
|
Accounts receivable,
net
|
29,104
|
|
|
26,128
|
|
Unbilled
receivables
|
14,442
|
|
|
44,032
|
|
Inventories,
net
|
14,094
|
|
|
14,130
|
|
Prepaid expenses and
other current assets
|
7,486
|
|
|
7,782
|
|
Total current
assets
|
103,533
|
|
|
125,623
|
|
Deferred income tax
asset, net
|
8,594
|
|
|
7,191
|
|
Property, plant and
equipment, net
|
13,257
|
|
|
13,041
|
|
Multi-client data
library, net
|
66,932
|
|
|
73,544
|
|
Goodwill
|
23,592
|
|
|
22,915
|
|
Right-of-use
assets
|
44,979
|
|
|
47,803
|
|
Other
assets
|
1,819
|
|
|
2,435
|
|
Total
assets
|
$
|
262,706
|
|
|
$
|
292,552
|
|
LIABILITIES AND
(DEFICIT) EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
|
1,787
|
|
|
$
|
2,228
|
|
Accounts
payable
|
30,384
|
|
|
34,913
|
|
Accrued
expenses
|
32,277
|
|
|
31,411
|
|
Accrued multi-client
data library royalties
|
26,310
|
|
|
29,256
|
|
Deferred
revenue
|
7,410
|
|
|
7,710
|
|
Current maturities of
operating lease liabilities
|
11,964
|
|
|
12,214
|
|
Total current
liabilities
|
110,132
|
|
|
117,732
|
|
Long-term debt, net
of current maturities
|
119,482
|
|
|
119,513
|
|
Operating lease
liabilities, net of current maturities
|
42,721
|
|
|
45,592
|
|
Other long-term
liabilities
|
1,810
|
|
|
1,891
|
|
Total
liabilities
|
274,145
|
|
|
284,728
|
|
(Deficit)
Equity:
|
|
|
|
Common
stock
|
141
|
|
|
140
|
|
Additional paid-in
capital
|
953,679
|
|
|
952,626
|
|
Accumulated
deficit
|
(947,452)
|
|
|
(926,092)
|
|
Accumulated other
comprehensive loss
|
(19,472)
|
|
|
(20,442)
|
|
Total stockholders'
(deficit) equity
|
(13,104)
|
|
|
6,232
|
|
Noncontrolling
interest
|
1,665
|
|
|
1,592
|
|
Total (deficit)
equity
|
(11,439)
|
|
|
7,824
|
|
Total liabilities and
(deficit) equity
|
$
|
262,706
|
|
|
$
|
292,552
|
|
ION GEOPHYSICAL
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$
|
(21,248)
|
|
|
$
|
(18,339)
|
|
Adjustments to
reconcile net loss to cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization (other than multi-client data library)
|
1,035
|
|
|
2,523
|
|
Amortization of
multi-client data library
|
11,100
|
|
|
9,793
|
|
Stock-based
compensation expense
|
1,293
|
|
|
812
|
|
Deferred income
taxes
|
(1,398)
|
|
|
(117)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(2,870)
|
|
|
(10,084)
|
|
Unbilled
receivables
|
29,498
|
|
|
20,919
|
|
Inventories
|
81
|
|
|
(164)
|
|
Accounts payable,
accrued expenses and accrued royalties
|
(2,013)
|
|
|
(10,155)
|
|
Deferred
revenue
|
(333)
|
|
|
2,381
|
|
Other assets and
liabilities
|
253
|
|
|
3,039
|
|
Net cash provided by
operating activities
|
15,398
|
|
|
608
|
|
Cash flows from
investing activities:
|
|
|
|
Investment in
multi-client data library
|
(8,767)
|
|
|
(9,240)
|
|
Purchase of property,
plant and equipment
|
(807)
|
|
|
(61)
|
|
Net cash used in
investing activities
|
(9,574)
|
|
|
(9,301)
|
|
Cash flows from
financing activities:
|
|
|
|
Payments under
revolving line of credit
|
—
|
|
|
(10,000)
|
|
Payments on notes
payable and long-term debt
|
(715)
|
|
|
(29,144)
|
|
Net proceeds from
issuance of stock
|
—
|
|
|
47,219
|
|
Other financing
activities
|
(239)
|
|
|
(575)
|
|
Net cash (used in)
provided by financing activities
|
(954)
|
|
|
7,500
|
|
Effect of change in
foreign currency exchange rates on cash, cash equivalents and
restricted cash
|
81
|
|
|
(113)
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
4,951
|
|
|
(1,306)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
33,854
|
|
|
52,419
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
38,805
|
|
|
$
|
51,113
|
|
The following table is a reconciliation of cash
and cash equivalents to total cash, cash equivalents and restricted
cash:
|
March
31,
|
|
2019
|
|
2018
|
Cash and cash
equivalents
|
$
|
38,407
|
|
|
$
|
50,750
|
|
Restricted cash
included in prepaid expenses and other current assets
|
398
|
|
|
60
|
|
Restricted cash
included in other long-term assets
|
—
|
|
|
303
|
|
Total cash, cash
equivalents and restricted cash shown in statements of cash
flows
|
$
|
38,805
|
|
|
$
|
51,113
|
|
ION GEOPHYSICAL
CORPORATION AND SUBSIDIARIES
|
SUMMARY OF SEGMENT
INFORMATION
|
(In
thousands)
|
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
Net
revenues:
|
|
|
|
|
E&P Technology
& Services:
|
|
|
|
|
New
Venture
|
$
|
13,471
|
|
|
$
|
13,726
|
|
|
Data
Library
|
9,948
|
|
|
5,948
|
|
|
Total multi-client
revenues
|
23,419
|
|
|
19,674
|
|
|
Imaging
Services
|
3,684
|
|
|
4,894
|
|
|
Total
|
27,103
|
|
|
24,568
|
|
|
Operations
Optimization:
|
|
|
|
|
Devices
|
4,820
|
|
|
4,158
|
|
|
Optimization Software
& Services
|
5,033
|
|
|
4,782
|
|
|
Total
|
9,853
|
|
|
8,940
|
|
|
Total
|
$
|
36,956
|
|
|
$
|
33,508
|
|
|
Gross profit
(loss):
|
|
|
|
|
E&P Technology
& Services
|
$
|
5,440
|
|
|
$
|
4,343
|
|
|
Operations
Optimization
|
4,516
|
|
|
4,311
|
|
|
Segment gross
profit
|
9,956
|
|
|
8,654
|
|
|
Other
|
(44)
|
|
(a)
|
(1,801)
|
|
(a)
|
Total
|
$
|
9,912
|
|
|
$
|
6,853
|
|
|
Gross
margin:
|
|
|
|
|
E&P Technology
& Services
|
20
|
%
|
|
18
|
%
|
|
Operations
Optimization
|
46
|
%
|
|
48
|
%
|
|
Segment gross
margin
|
27
|
%
|
|
26
|
%
|
|
Other
|
—
|
%
|
|
—
|
%
|
|
Total
|
27
|
%
|
|
20
|
%
|
|
Income (loss) from
operations:
|
|
|
|
|
E&P Technology
& Services
|
$
|
(1,615)
|
|
|
$
|
(794)
|
|
|
Operations
Optimization
|
170
|
|
|
786
|
|
|
Support and
other
|
(14,492)
|
|
(b)
|
(12,632)
|
|
(b)
|
Loss from
operations
|
(15,937)
|
|
|
(12,640)
|
|
|
Interest expense,
net
|
(3,112)
|
|
|
(3,836)
|
|
|
Other expense,
net
|
(792)
|
|
|
(791)
|
|
|
Loss before income
taxes
|
$
|
(19,841)
|
|
|
$
|
(17,267)
|
|
|
|
|
(a)
|
Relates to gross loss
of previously reported Ocean Bottom Integrated Technologies
segment.
|
(b)
|
Includes loss
from operations of previously reported Ocean Bottom Integrated
Technologies segment of $0.8 million and $2.8 million for the three
months ended March 31, 2019 and 2018, respectively, which includes
item (a) above and operating expenses of $0.8 million and $1.0
million for the three months ended March 31, 2019 and 2018,
respectively.
|
ION GEOPHYSICAL CORPORATION AND
SUBSIDIARIES
Reconciliation of Adjusted EBITDA to Net Loss
(Non-GAAP Measure)
(In thousands)
(Unaudited)
The term Adjusted EBITDA represents net loss before interest
expense, interest income, income taxes and depreciation and
amortization charges. Adjusted EBITDA is not a measure of
financial performance under generally accepted accounting
principles and should not be considered in isolation from or as a
substitute for net income (loss) or cash flow measures prepared in
accordance with generally accepted accounting principles or as a
measure of profitability or liquidity. Additionally, Adjusted
EBITDA may not be comparable to other similarly titled measures of
other companies. The Company has included Adjusted EBITDA as a
supplemental disclosure because its management believes that
Adjusted EBITDA provides investors a helpful measure for comparing
its operating performance with the performance of other companies
that have different financing and capital structures or tax
rates. The Company had previously reported stock appreciation
rights (SARs) expense as an adjustment to its Adjusted EBITDA due
to the unusual nature associated with accelerated vesting of
certain SARs awards. Since such condition no longer exists
and considering the recurring nature of recording outstanding SARs
at their fair value, the Company has ceased reflecting SARs expense
as an adjustment to its Adjusted EBITDA. To assist with
comparability, the Company has reduced its previously reported
Adjusted EBITDA by $1.2 million
related to SARs expense in the first quarter 2018.
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
Net loss
|
$
|
(21,248)
|
|
|
$
|
(18,339)
|
|
Interest expense,
net
|
3,112
|
|
|
3,836
|
|
Income tax
expense
|
1,407
|
|
|
1,072
|
|
Depreciation and
amortization expense
|
12,135
|
|
|
12,316
|
|
Adjusted
EBITDA
|
$
|
(4,594)
|
|
|
$
|
(1,115)
|
|
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content:http://www.prnewswire.com/news-releases/ion-reports-first-quarter-2019-results-300842160.html
SOURCE ION Geophysical Corporation