Mitcham Industries Reports Fiscal 2018 First Quarter Results
HUNTSVILLE, Texas, June 7, 2017 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("the Company") today announced financial results for its fiscal 2018 first quarter ended April 30, 2017.
Total revenues for the first quarter of fiscal 2018 were $18.4 million compared to $11.7 million in the first quarter of fiscal 2017. Revenues from the Equipment Manufacturing and Sales segment decreased slightly to $6.9 million in the first quarter, compared to $7.2 million in the same period last year. Revenues from the Equipment Leasing segment were $11.5 million in the first quarter compared to $4.5 million in the same period last year. During the quarter, the Company sold lease pool equipment for proceeds of $8.8 million as it continues to redeploy capital into higher return investments. The Company reported a net loss attributable to common shareholders of $2.9 million, or $(0.24) per share, in the first quarter of fiscal 2018 compared to a net loss of $6.4 million, or $(0.53) per share, in the first quarter of fiscal 2017. Cash flow provided by operating activities was approximately $1.1 million in the first quarter of fiscal 2018 compared to $1.8 million in the first quarter of fiscal 2017.
Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation, non-cash costs of lease pool equipment sales and non-cash foreign exchange gains and losses) for the first quarter of fiscal 2018 was approximately $9.0 million compared to $2.2 million in the same period last year. Adjusted EBITDA, which is not a measure determined in accordance with United States generally accepted accounting principles ("GAAP"), is defined and reconciled to reported net loss and cash provided by operating activities in the accompanying financial tables.
Rob Capps, Mitcham's Co-Chief Executive Officer, stated, "Our first quarter unfolded essentially as anticipated as we continue to make progress in re-positioning our Company to be a more significant player in the marine industry and decreasing our exposure to oil and gas exploration activities. We are taking advantage of structural changes in the seismic data acquisition industry to rationalize our lease pool of equipment and re-deploy capital into more attractive opportunities.
"Reviewing our financial results for the first fiscal quarter of 2018, the Equipment Manufacturing and Sales segment revenues were essentially flat year-over-year and slightly higher sequentially, which remains below our expectation. Lower than expected segment revenues were primarily due to delays in certain orders and the timing of deliveries.
"Our scope of business in this market is evolving and becoming a larger part of our total business. We are pursuing several new opportunities with commercial and military applications, both internationally and in the United States. We currently anticipate a stronger fiscal year in this segment driven by anticipated deliveries and improved visibility into oceanographic and hydrographic opportunities. We are not only seeing a greater number of opportunities as we continue to penetrate new markets and add new customers, but we are also seeing the scope of some of these projects become larger as well.
"Land and marine seismic exploration activity continues to be depressed from historical levels throughout both hemispheres, with a significant excess supply of equipment overhanging the market. However, improved oil prices have generated increased levels of both inquiry and bid activity and we are starting to very slowly recover from the significant downturn of the last two years.
"We continue to carry a pristine balance sheet with no debt. Despite the major downturn that we have experienced over the past two years, we generated cash, repaid debt and strengthened our capital structure. We do anticipate generating positive EBITDA and operating cash flow in the current fiscal year.
"As we move through fiscal 2018, we see a number of exciting opportunities for our manufacturing business and also expect continued slow improvement in our leasing business. Our strategic intent going forward is to continue to diversify our sales away from sole dependence on the oil and gas industry. This will be done primarily by expanding our equipment and manufacturing business, both organically and through acquisitions, to gain a greater foothold in the global marine industry. Based on these factors, we currently anticipate that fiscal 2018 will deliver improved financial results over fiscal 2017, not in small part due to our strategic repositioning of the Company as well as improved stability in the oil and gas markets."
FISCAL 2018 FIRST QUARTER RESULTS
The first quarter revenue increase was driven for the second consecutive quarter by a large increase in lease pool equipment sales compared to the same quarter a year ago. Equipment and manufacturing sales decreased 4% year-over-year, while equipment leasing revenues, excluding lease pool equipment sales, decreased 25% from the first quarter of fiscal 2017. Total revenues for the first quarter of fiscal 2018 were $18.4 million compared to $11.7 million in the same period last year. A significant portion of our revenues is typically generated from geographic areas outside the United States. The percentage of revenues from international customers was approximately 55% (approximately 84% excluding proceeds from lease pool equipment sales) in the first quarter of fiscal 2018 compared to approximately 77% in last year's first fiscal quarter.
Equipment manufacturing and sales decreased slightly to $6.9 million in the first quarter of fiscal 2018 compared to $7.2 million in last year's first quarter. The first quarter sales consisted of approximately $4.9 million of Seamap equipment, $0.9 million from Klein (including $0.2 million of intra-segment sales) and $1.3 million by SAP.
Equipment leasing revenues for the first quarter of fiscal 2018, excluding lease pool equipment sales, were $2.7 million compared to $3.6 million in the same period last year. The year-over-year decrease in first quarter equipment leasing revenues was driven by a reduction in exploration activity.
Lease pool and other equipment sales were $8.8 million in the first quarter of fiscal 2018, compared to $0.9 million in the first quarter a year ago.
Lease pool depreciation expense in the first quarter of fiscal 2018 decreased to $4.2 million from $6.9 million in the same period a year ago, due to the reduction in lease pool purchases and sales of lease pool equipment in fiscal years 2016 and 2017, as well as the current fiscal year.
General and administrative expenses decreased to $4.9 million in the first quarter of fiscal 2018 versus $5.3 million in the first quarter of fiscal 2017, due to the impact of continuing cost reduction efforts.
CONFERENCE CALL
We have scheduled a conference call for Thursday, June 8, 2017 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2018 first quarter results. To access the call, please dial (412) 902-0030 and ask for the Mitcham Industries call at least 10 minutes prior to the start time. Investors may also listen to the conference live on the Mitcham Industries corporate website, http://www.mitchamindustries.com, by logging onto the site and clicking "Investor Relations." A telephonic replay of the conference call will be available through June 22, 2017 and may be accessed by calling (201) 612-7415 and using passcode 13662635#. A webcast archive will also be available at http://www.mitchamindustries.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Donna Washburn at Dennard -- Lascar Associates (713) 529?6600 or email dwashburn@dennardlascar.com.
About Mitcham Industries
Mitcham Industries, Inc. provides equipment to the geophysical, oceanographic and hydrographic industries. Headquartered in Huntsville, Texas, Mitcham has a global presence with operating locations in the United States, Canada, Australia, Singapore, Russia, Hungary, Colombia and the United Kingdom. Mitcham's worldwide Equipment Manufacturing and Sales Segment, which includes its Seamap and Klein Marine Systems units, designs, manufactures and sells specialized, high performance, marine sonar and seismic equipment. Through its Leasing Segment, Mitcham believes it is the largest independent provider of exploration equipment to the seismic industry.
Certain statements and information in this press release concerning results for the quarter ended April 30, 2017 may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "plan," "intend," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues, EBITDA, cash flow and operating results are based on our forecasts of our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see our filings with the SEC, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Contacts: Rob Capps, Co-CEO
Mitcham Industries, Inc.
936-291-2277
Jack Lascar / Mark Roberson
Dennard -- Lascar Associates
713-529-6600
Tables to Follow
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
April 30, 2017 January 31, 2017
-------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $2,053 $2,902
Restricted cash 403 609
Accounts and contracts
receivable, net of allowance
for doubtful accounts of
$3,720 and $3,716 at April
30, 2017 and January 31,
2017, respectively 16,028 15,830
Inventories, net 13,488 11,960
Prepaid income taxes 221 1,565
Prepaid expenses and other
current assets 1,752 2,193
Total current assets 33,945 35,059
Seismic equipment lease pool
and property and equipment,
net 33,380 43,838
Intangible assets, net 8,720 9,012
Goodwill 3,997 3,997
Non-current prepaid income
taxes 1,192 -
Long-term receivables net of
allowance for doubtful
accounts of $2,188 at April
30, 2017 and January 31, 2017 4,488 2,780
Other assets 28 28
--- ---
Total assets $85,750 $94,714
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,876 $1,929
Current maturities - long-
term debt - 6,371
Deferred revenue 560 651
Accrued expenses and other
current liabilities 4,595 4,514
----- -----
Total current liabilities 7,031 13,465
Deferred tax liability 296 317
Total liabilities 7,327 13,782
Shareholders' equity:
Preferred stock, $1.00 par
value; 1,000 shares
authorized; 348 and 343
shares issued and outstanding
at April 30, 2017 and January
31, 2017, respectively 7,391 7,294
Common stock, $0.01 par value;
20,000 shares authorized;
14,019 shares issued at April
30, 2017 and January 31, 2017 140 140
Additional paid-in capital 121,625 121,401
Treasury stock, at cost (1,929
shares at April 30, 2017 and
January 31, 2017) (16,858) (16,858)
Accumulated deficit (23,310) (20,451)
Accumulated other
comprehensive loss (10,565) (10,594)
------- -------
Total shareholders' equity 78,423 80,932
------ ------
Total liabilities and
shareholders' equity $85,750 $94,714
======= =======
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three Months Ended
April 30,
---------
2017 2016
----
Revenues:
Equipment
manufacturing and
sales $6,888 $7,188
Equipment leasing 2,717 3,608
Lease pool and
other equipment
sales 8,828 935
Total revenues 18,433 11,731
------ ------
Cost of sales:
Cost of equipment
manufacturing and
sales 3,975 4,021
Direct costs -
equipment leasing 944 752
Direct costs -
lease pool
depreciation 4,181 6,873
Cost of lease pool
and other
equipment sales 6,139 451
Total cost of
sales 15,239 12,097
------ ------
Gross profit
(loss) 3,194 (366)
Operating expenses:
General and
administrative 4,902 5,313
Depreciation and
amortization 581 652
--- ---
Total operating
expenses 5,483 5,965
----- -----
Operating loss (2,289) (6,331)
Other (expense) income:
Interest, net (46) (264)
Other, net (101) 451
---- ---
Total other
(expense) income (147) 187
Loss before income
taxes (2,436) (6,144)
Provision for
income taxes (229) (299)
---- ----
Net loss $(2,665) $(6,443)
Preferred stock
dividends (194) -
---- ---
Net loss
attributable to
common
shareholders $(2,859) $(6,443)
------- -------
Net loss per common share:
Basic $(0.24) $(0.53)
====== ======
Diluted $(0.24) $(0.53)
====== ======
Shares used in computing net loss per common
share:
Basic 12,078 12,059
Diluted 12,078 12,059
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Three Months
Ended April 30,
---------------
2017 2016
---- ----
Cash flows from operating
activities:
Net loss $(2,665) $(6,443)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 4,791 7,558
Stock-based compensation 224 247
Provision for inventory
obsolescence 8 43
Gross profit from sale of lease
pool equipment (2,689) (491)
Deferred tax benefit (27) (497)
Changes in working capital items:
Trade accounts and contracts
receivable 2,175 2,809
Inventories (1,403) 297
Prepaid expenses and other
current assets 549 (250)
Income taxes receivable and
payable 149 640
Accounts payable, accrued
expenses, other current
liabilities and deferred revenue 48 (2,044)
Foreign exchange gains net of
losses (48) (119)
--- ----
Net cash provided by operating
activities 1,112 1,750
----- -----
Cash flows from investing
activities:
Purchases of seismic equipment
held for lease (158) (522)
Purchases of property and
equipment (28) (82)
Sale of used lease pool equipment 4,496 906
Net cash provided by investing
activities 4,310 302
----- ---
Cash flows from financing
activities:
Net payments on revolving line of
credit (3,500) (1,950)
Payments on term loan and other
borrowings (2,807) (804)
Net proceeds from preferred stock
offerings 27 -
Preferred stock dividends (194) -
Net cash used in financing
activities (6,474) (2,754)
Effect of changes in foreign
exchange rates on cash and cash
equivalents (3) (707)
--- ----
Net change in cash and cash
equivalents (1,055) (1,409)
Cash and cash equivalents,
beginning of period 3,511 3,769
----- -----
Cash and cash equivalents, end of
period $2,456 $2,360
====== ======
MITCHAM INDUSTRIES, INC.
Reconciliation of Net Loss and Net Cash Provided by Operating Activities to EBITDA and
Adjusted EBITDA
For the Three Months Ended
April 30,
---------
2017 2016
---- ----
(in thousands)
Reconciliation of Net loss to
EBITDA and Adjusted EBITDA
Net loss $(2,665) $(6,443)
Interest expense,
net 46 264
Depreciation and
amortization 4,791 7,558
Provision for income
taxes 229 299
EBITDA (1) 2,401 1,678
Non-cash foreign
exchange losses
(gains) 194 (174)
Stock-based
compensation 224 247
Cost of lease pool
sales 6,139 415
===== ===
Adjusted EBITDA (1) $8,958 $2,166
====== ======
Reconciliation of Net cash
provided by operating
activities to EBITDA
Net cash provided by
operating
activities $1,112 $1,750
Stock-based
compensation (224) (247)
Changes in trade
accounts and
contracts
receivable (2,175) (2,809)
Provision for
inventory (8) (43)
Interest paid 92 338
Taxes paid, net of
refunds 13 151
Gross profit from
sale of lease pool
equipment 2,689 491
Changes in inventory 1,403 (297)
Changes in accounts
payable, accrued
expenses other
current liabilities
and deferred
revenue (48) 2,044
Changes in prepaid
expenses and other
current assets (549) 250
Foreign FX currency
losses 48 119
Other 48 (69)
--- ---
EBITDA (1) $2,401 $1,678
====== ======
(1) EBITDA is defined as net income
before (a) interest income and
interest expense, (b) provision
for (or benefit from) income taxes
and (c) depreciation and
amortization. Adjusted EBITDA
excludes non-cash foreign
exchange gains and losses, non-
cash costs of lease pool equipment
sales and stock-based
compensation. This definition of
Adjusted EBITDA is consistent with
the definition in the Credit
Agreement. We consider EBITDA and
Adjusted EBITDA to be important
indicators for the performance of
our business, but not measures of
performance or liquidity
calculated in accordance with
accounting principles generally
accepted in the United States of
America ("GAAP"). We have included
these non-GAAP financial measures
because management utilizes this
information for assessing our
performance and liquidity, and as
indicators of our ability to make
capital expenditures, service debt
and finance working capital
requirements. The Credit Agreement
contained financial covenants
based on EBITDA or Adjusted
EBITDA. Management believes that
EBITDA and Adjusted EBITDA are
measurements that are commonly
used by analysts and some
investors in evaluating the
performance and liquidity of
companies such as us. In
particular, we believe that it is
useful to our analysts and
investors to understand this
relationship because it excludes
transactions not related to our
core cash operating activities.
We believe that excluding these
transactions allows investors to
meaningfully trend and analyze the
performance of our core cash
operations. EBITDA and Adjusted
EBITDA are not measures of
financial performance or liquidity
under GAAP and should not be
considered in isolation or as
alternatives to cash flow from
operating activities or as
alternatives to net income as
indicators of operating
performance or any other measures
of performance derived in
accordance with GAAP. In
evaluating our performance as
measured by EBITDA, management
recognizes and considers the
limitations of this measurement.
EBITDA and Adjusted EBITDA do not
reflect our obligations for the
payment of income taxes, interest
expense or other obligations such
as capital expenditures.
Accordingly, EBITDA and Adjusted
EBITDA are only two of the
measurements that management
utilizes. Other companies in our
industry may calculate EBITDA or
Adjusted EBITDA differently than
we do and EBITDA and Adjusted
EBITDA may not be comparable with
similarly titled measures reported
by other companies.
For the Three Months Ended
April 30,
---------
2017 2016
---- ----
(in thousands)
Revenues:
Equipment Manufacturing and Sales $6,911 $7,220
Equipment Leasing 11,545 4,543
Inter-segment sales (23) (32)
--- ---
Total revenues 18,433 11,731
------ ------
Cost of sales:
Equipment Manufacturing and Sales 3,998 4,058
Equipment Leasing 11,264 8,076
Inter-segment costs (23) (37)
--- ---
Total cost of sales 15,239 12,097
------ ------
Gross profit (loss) 3,194 (366)
Operating expenses:
General and administrative 4,902 5,313
Depreciation and amortization 581 652
--- ---
Total operating expenses 5,483 5,965
----- -----
Operating loss $(2,289) $(6,331)
======= =======
Equipment Manufacturing and Sales
Segment-
Revenue:
Seamap $4,886 $4,919
Klein 938 2,136
SAP 1,290 480
Intra-segment sales (203) (315)
6,911 7,220
Cost of sales:
Seamap 2,561 2,539
Klein 732 1,471
SAP 1,017 363
Intra-segment sales (312) (315)
---- ----
3,998 4,058
----- -----
Gross profit $2,913 $3,162
====== ======
Gross profit margin 42% 44%
Equipment Leasing Segment-
Revenue:
Equipment leasing $2,717 $3,608
Lease pool equipment sales 8,828 906
Other equipment sales - 29
11,545 4,543
Cost of sales:
Direct costs-equipment leasing 944 752
Lease pool depreciation 4,181 6,873
Cost of lease pool equipment sales 6,139 415
Cost of other equipment sales - 36
11,264 8,076
------ -----
Gross profit (loss) $281 $(3,533)
==== =======
Gross profit (loss) % 2% (78)%
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SOURCE Mitcham Industries, Inc.
