Mitcham Industries Reports Fiscal 2019 First Quarter Results
HUNTSVILLE, Texas, June 6, 2018 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("Mitcham" or "the Company") today announced financial results for its fiscal 2019 first quarter ended April 30, 2018.
Total revenues for the first quarter of fiscal 2019 were $7.6 million compared to $18.4 million in the first quarter of fiscal 2018, largely driven by a decline in the sale of lease pool equipment and delays in orders for marine technology products. The Company had sold $8.8 million of lease pool equipment during the first quarter of fiscal 2018. Revenues from the Marine Technology Products segment fell to $3.6 million in the first quarter, compared to $6.9 million in the same period last year. While Seamap sales declined mainly due to delays in expected incoming orders, Klein sales increased 61% compared to the same period last year. Equipment Leasing revenues were $2.7 million in the first quarter, flat compared to the same period last year.
The Company reported a net loss attributable to common shareholders of $6.3 million, or $(0.52) per share, in the first quarter of fiscal 2019 compared to a net loss of $2.9 million, or $(0.24) per share, in the first quarter of fiscal 2018.
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 2019 was a loss of approximately $1.5 million compared to a gain of approximately $9.0 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, "Despite a lackluster first quarter, our Marine Technology Products segment has recently been experiencing an increase in order activity, a good indicator that the marine markets are finally starting to show some improvement. As we disclosed on May 30(th), Mitcham has recently booked orders totaling approximately $6.0 million for Klein's sonar and related products. In addition, Mitcham's Seamap unit has also received orders totaling approximately $6.1 million for seismic source controllers, RGPS positioning systems and related items. Seamap has also received orders totaling approximately $1.0 million related to its recently-introduced towed streamer products. These orders combined with an increased level of inquiries from current and potential new customers, should result in a much stronger second-half of fiscal 2019. In addition, Mitcham's capital structure continues to remain strong with no debt on our balance sheet and ample liquidity, including cash and cash equivalents of $8.6 million as of April 30, 2018.
"Eighteen months ago, we embarked on a strategic re-positioning to become a significant provider of technology to broader marine applications. We are very pleased that this endeavor is beginning to pay dividends. The solid streamer and sensor technology that we acquired earlier this year has extensive application in the oceanographic and hydrographic industries and provides clear opportunities to integrate this technology into new markets for us in areas such as anti-submarine warfare and maritime security systems. Furthermore, our previously announced rental partnerships with INOVA and Lanfang Dynamic Technologies provide Mitcham with increased flexibility and a lower cost structure in delivering state-of-the-art technology to our land seismic leasing equipment customers."
FISCAL 2019 FIRST QUARTER RESULTS
Total revenues for the first quarter of fiscal 2019 decreased to $7.6 million driven mainly by a delay in marine technology products sales and a large decrease in lease pool equipment sales compared to last year's fiscal first quarter. Marine technology products sales decreased 46% year-over-year, while equipment leasing revenues, excluding lease pool equipment sales, were flat year-over-year.
Marine technology products sales decreased to $3.7 million in the first quarter of fiscal 2019 compared to $6.9 million in last year's first quarter mainly due to a decline in Seamap sales. However, through May 31, 2018, Seamap has now received orders for seismic source controllers, positioning systems and related equipment totaling approximately $6.1 million. Furthermore, this segment has recently received orders of approximately $1.0 million for the recently introduced SeaLink streamer product line. Klein sales increased 61% during the first quarter compared to last year's first quarter. The first quarter sales consisted of approximately $1.8 million of Seamap, $1.5 million from Klein (including $36,000 of intra-segment sales) and $0.5 million by SAP.
Equipment leasing revenues for the first quarter of fiscal 2019, excluding lease pool equipment sales, were $2.7 million flat compared to the same period last year. Lease pool equipment sales were $1.2 million in the first quarter of fiscal 2019, compared to $8.8 million in the first quarter a year ago.
Lease pool depreciation expense in the first quarter of fiscal 2019 decreased to $2.7 million from $4.2 million in the same period a year ago, due to a combination of lower lease pool purchases and increased lease pool sales over the past year.
Selling, general and administrative expenses increased to $5.6 million in the first quarter of fiscal 2019 versus $4.8 million in the first quarter of fiscal 2018, due primarily to approximately $400,000 in incremental expenses related to the transfer of the acquired technology and the set-up of related production and repair facilities in Asia. The lower sales by Seamap in the first quarter of fiscal 2019 also resulted in an increase in unabsorbed overhead costs which affected general and administrative expenses.
CONFERENCE CALL
We have scheduled a conference call for Thursday, June 7 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2019 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 14, 2018 and may be accessed by calling (201) 612-7415 and using passcode 13680079#. 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 Investor Relations (713) 529?6600 or email dwashburn@dennardlascar.com.
About Mitcham Industries
Mitcham Industries, Inc. provides technology to the oceanographic, hydrographic, defense, seismic and security 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 Marine Technology Products segment, which includes its Seamap and Klein Marine Systems units, designs, manufactures and sells specialized, high performance, marine sonar and seismic equipment. Through its Equipment 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, 2018 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 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.
Tables to Follow
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
April 30, 2018 January 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $8,613 $9,902
Restricted cash 233 244
Accounts and contracts receivable, net of
allowance for doubtful accounts of $3,560 and
$3,885 at April 30, 2018 and January 31, 2018,
respectively 12,333 10,494
Inventories, net 11,432 10,856
Prepaid expenses and other current assets 2,132 1,550
----- -----
Total current assets 34,743 33,046
Seismic equipment lease pool and property and
equipment, net 21,046 22,900
Intangible assets, net 11,484 8,015
Goodwill 2,531 2,531
Non-current prepaid income taxes 1,603 1,609
Long-term receivables, net of allowance for
doubtful accounts of $94 and $2,282 at April 30,
2018 and January 31, 2018, respectively 706 4,652
Other assets 611 926
--- ---
Total assets $72,724 $73,679
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,889 $1,271
Deferred revenue 723 741
Accrued expenses and other current liabilities 4,895 5,253
Income taxes payable 896 258
--- ---
Total current liabilities 9,403 7,523
Deferred tax liability 105 307
--- ---
Total liabilities 9,508 7,830
Shareholders' equity:
Preferred stock, $1.00 par value; 1,000 shares
authorized; 698 and 532 issued and outstanding at
April 30, 2018, and January 31, 2018,
respectively 15,312 11,544
Common stock $.01 par value; 20,000 shares
authorized; 14,019 shares issued at April 30,
2018 and January 31, 2018 140 140
Additional paid-in capital 122,430 122,304
Treasury stock, at cost (1,929 at April 30, 2018
and January 31, 2018) (16,860) (16,860)
Accumulated deficit (48,715) (42,425)
Accumulated other comprehensive loss (9,091) (8,854)
------ ------
Total shareholders' equity 63,216 65,849
------ ------
Total liabilities and shareholders' equity $72,724 $73,679
======= =======
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three Months Ended April
30,
2018 2017
---- ----
Revenues:
Sale of marine technology products $3,566 $6,888
Equipment leasing 2,697 2,717
Sale of lease pool equipment 1,350 8,828
Total revenues 7,613 18,433
----- ------
Cost of sales:
Sale of marine technology products 2,086 3,975
Equipment leasing (including lease pool depreciation) 3,582 5,125
Lease pool equipment sales 700 6,139
--- -----
Total cost of sales 6,368 15,239
----- ------
Gross profit 1,245 3,194
----- -----
Operating expenses:
Selling, general and administrative 5,630 4,804
Research and development 370 98
Provision for doubtful accounts 200 -
Depreciation and amortization 617 581
--- ---
Total operating expenses 6,817 5,483
----- -----
Operating loss (5,572) (2,289)
Other income (expense):
Interest, net 18 (46)
Other, net 86 (101)
--- ----
Total other income (expense) 104 (147)
--- ----
Loss before income taxes (5,468) (2,436)
Provision for income taxes (437) (229)
---- ----
Net loss $(5,905) $(2,665)
Preferred stock dividends (385) (194)
---- ----
Net loss attributable to common shareholders $(6,290) $(2,859)
======= =======
Net loss per common share:
Basic $(0.52) $(0.24)
====== ======
Diluted $(0.52) $(0.24)
====== ======
Shares used in computing loss per common share:
Basic 12,087 12,078
====== ======
Diluted 12,087 12,078
====== ======
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Three Months
Ended April 30,
2018 2017
---- ----
Cash flows from operating activities:
Net loss $(5,905) $(2,665)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 3,303 4,791
Stock-based compensation 126 224
Provision for doubtful accounts, net of
charge offs (200) -
Provision for inventory obsolescence - 8
Gross profit from sale of lease pool
equipment (536) (2,689)
Deferred tax benefit (202) (27)
Changes in working capital items:
Trade accounts and contracts receivable 2,418 2,175
Unbilled revenue (930) -
Inventories (844) (1,403)
Prepaid expenses and other current assets (1,520) 549
Income taxes payable 642 149
Accounts payable, accrued expenses and
other current liabilities (47) 48
Deferred revenue 313 -
Foreign exchange losses net of gains 16 (48)
--- ---
Net cash (used in) provided by operating
activities (3,366) 1,112
------ -----
Cash flows from investing activities:
Purchases of seismic equipment held for
lease (190) (158)
Acquisition of assets (3,000) -
Purchases of property and equipment (113) (28)
Sales of used lease pool equipment 1,620 4,496
----- -----
Net cash (used in) provided by investing
activities (1,683) 4,310
------ -----
Cash flows from financing activities:
Net payments on revolving line of credit - (3,500)
Payments on term loan and other borrowings - (2,807)
Net proceeds from preferred stock offering 3,812 27
Preferred stock dividends (385) (194)
Net cash provided by (used in) financing
activities 3,427 (6,474)
Effect of changes in foreign exchange
rates on cash, cash equivalents and
restricted cash 322 (3)
--- ---
Net change in cash, cash equivalents and
restricted cash (1,300) (1,055)
Cash, cash equivalents and restricted
cash, beginning of period 10,146 3,511
------ -----
Cash, cash equivalents and restricted
cash, end of period $8,846 $2,456
====== ======
MITCHAM INDUSTRIES, INC.
Reconciliation of Net Loss and Net Cash Provided by Operating Activities to EBITDA and
Adjusted EBITDA
(unaudited)
For the Three Months Ended
April 30,
2018 2017
---- ----
(in thousands)
Reconciliation of Net loss to EBITDA and Adjusted EBITDA
Net loss $(5,905) $(2,665)
Interest (income) expense, net (18) 46
Depreciation and amortization 3,303 4,791
Provision for income taxes 437 229
--- ---
EBITDA (1) (2,183) 2,401
Non-cash foreign exchange (gains) losses (49) 194
Stock-based compensation 126 224
Cost of lease pool sales 627 6,139
--- -----
Adjusted EBITDA (1) $(1,479) $8,958
======= ======
Reconciliation of Net cash provided by operating activities to EBITDA
Net cash (used in) provided by operating activities $(3,366) $1,112
Stock-based compensation (126) (224)
Provision for doubtful accounts (200) -
Provision for inventory obsolescence - (8)
Changes in trade accounts, contracts and notes receivable (1,488) (2,175)
Interest paid 1 92
Taxes paid, net of refunds 46 13
Gross profit from sale of lease pool equipment 536 2,689
Changes in inventory 844 1,403
Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue (266) (48)
Changes in prepaid expenses and other current assets 1,520 (549)
Foreign exchange (losses) gains (16) 48
Other 332 48
--- ---
EBITDA (1) $(2,183) $2,401
======= ======
(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, certain non-
recurring contract settlement costs
and stock-based compensation. 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 and finance
working capital requirements. We
believe 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.
Mitcham Industries, Inc.
Segment Operating Results
(in thousands)
(unaudited)
For the Three Months Ended
April 30,
2018 2017
---- ----
(in thousands)
Revenues:
Sale of marine technology products $3,708 $6,911
Equipment leasing 4,047 11,545
Inter-segment sales (142) (23)
---- ---
Total revenues 7,613 18,433
----- ------
Cost of sales:
Marine technology products 2,228 3,998
Equipment leasing 4,282 11,264
Inter-segment costs (142) (23)
---- ---
Total cost of sales 6,368 15,239
----- ------
Gross profit 1,245 3,194
Operating expenses:
Selling, general and administrative 5,630 4,804
Research and development 370 98
Provision for doubtful accounts 200 -
Depreciation and amortization 617 581
--- ---
Total operating expenses 6,817 5,483
----- -----
Operating loss $(5,572) $(2,289)
======= =======
Marine Technology Products Segment:
Revenues:
Seamap $1,752 $4,886
Klein 1,512 938
SAP 480 1,290
Intra-segment sales (36) (203)
--- ----
3,708 6,911
Cost of sales:
Seamap 844 2,561
Klein 1,036 732
SAP 398 1,017
Intra-segment sales (50) (312)
--- ----
2,228 3,998
----- -----
Gross profit $1,480 $2,913
====== ======
Gross profit margin 40% 42%
Equipment Leasing Segment:
Revenue:
Equipment leasing $2,697 $2,717
Lease pool equipment sales 1,163 8,828
Other equipment sales 187 -
--- ---
4,047 11,545
Cost of sales:
Direct costs-equipment leasing 928 944
Lease pool depreciation 2,654 4,181
Cost of lease pool equipment sales 627 6,139
Cost of other equipment sales 73 -
--- ---
4,282 11,264
----- ------
Gross (loss) profit $(235) $281
===== ====
Gross (loss) profit margin (6)% 2%
Contacts: Rob Capps, Co-CEO
Mitcham Industries, Inc.
936-291-2277
Jack Lascar / Mark Roberson
Dennard Lascar Investor
Relations
713-529-6600
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SOURCE Mitcham Industries, Inc.
