Mitcham Industries Reports Fiscal 2019 Third Quarter Results
HUNTSVILLE, Texas, Dec. 6, 2018 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("Mitcham" or "the Company") today announced financial results for its fiscal 2019 third quarter ended October 31, 2018.
Total revenues for the third quarter of fiscal 2019 increased 71% to $14.7 million, compared to $8.6 million in the third quarter of fiscal 2018 and $8.4 million in the second quarter of fiscal 2019, driven by both an increase in orders for marine technology products as well as an uptick in leasing revenues. Revenues from the Marine Technology Products segment rose 55% to $9.3 million in the third quarter, compared to $6.0 million in the same period last year and $6.0 million in the second quarter of this fiscal year. Revenue from the Equipment Leasing segment increased 97% to $5.4 million in the third quarter compared to the same period last year. The operating loss for the third quarter of fiscal 2019 improved to $349,000 as compared to $4.8 million in the third quarter of the prior fiscal year and $4.6 million in the second quarter of the current fiscal year.
During the third quarter, the Company sold its Russian land leasing operations, through the sale of its wholly-owned Russian subsidiary. Since the Company no longer has exposure to Russian Ruble to US Dollar translation risk, United States generally accepted accounting principles ("GAAP") require the cumulative translation loss related to the Russian Ruble that had previously been a component of Other Comprehensive Income in the amount of approximately $5.4 million be charged to income in the current period. Accordingly, a loss of approximately $4.9 million, or $(0.40) per share was recorded in third quarter of fiscal 2019 related to the sale of these operations. The Company reported a net loss attributable to common shareholders of $5.6 million, or $(0.47) per share, in the third quarter of fiscal 2019 compared to a net loss of $5.5 million, or $(0.46) per share, in the third quarter of fiscal 2018. Excluding the impact of the one-time loss related to the sale of the Company's Russian operations, the loss related to common shareholders in the third quarter was $735,000, or $(0.06) per share.
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 third quarter of fiscal 2019 was approximately $3.4 million compared to a loss of approximately $406,000 in the same period last year. Adjusted EBITDA, which is not a measure determined in accordance with 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 third quarter results reflect marked improvement compared to not only the third quarter of last year but also to the entire first half of this fiscal year. This improved performance is slightly better than originally anticipated and reflects the impact from the strategic steps we have taken over the past several years.
"As previously anticipated, our Marine Technology Products segment experienced an increase in activity during the third quarter, resulting in a significant improvement in top-line growth. Our Seamap business delivered a digital source controller system during the quarter; and there has been a healthy increase in demand for spare parts and repairs. The large installed base of Seamap products is providing substantial upside in terms of increased repairs and maintenance, and we expect that business to continue to grow in the fourth quarter and into fiscal 2020. We anticipate the delivery of our first SeaLink system in the fourth quarter, as well as an additional digital source controller system. Increased marine exploration activity, including ocean bottom node surveys, has resulted in increased inquiries for source controller and RGPS positioning systems. We expect SeaLink repair activity to continue to ramp-up in the fourth quarter and beyond.
"For our Klein business, we saw a significant improvement from recent periods. This was driven in part by the delivery of a previously announced order for our flagship 5900 sonar system for the Royal Netherlands Navy. We are experiencing a pick-up in activity at Klein, and we are receiving an increasing level of inquiries from our continued engagement with various navies in addition to hydrographic and oceanographic companies.
"On the Equipment Leasing front, we finalized our exit from the Russian market during the third quarter, resulting in a decrease in overhead costs. The restructuring of our leasing business over the past couple of years is now paying off, and we have started to benefit from our cost reductions efforts. Leasing activity is experiencing increased activity in the United States, Colombia, and Europe. This contributed to a 53% increase in leasing revenues over the prior year quarter.
"On the financial front, our capital structure remains strong, with no debt on our balance sheet and ample liquidity, including cash and cash equivalents of $5.6 million as of October 31, 2018. We are excited to be benefitting from our strategic re-positioning of the company as evidenced by the improved results from both Seamap and Klein this quarter. As we build on our position in the marine technology marketplace, we expect to grow the company by taking advantage of the opportunities afforded us in several new markets. We expect our fourth quarter will continue this trend."
FISCAL 2019 THIRD QUARTER RESULTS
Total revenues for the third quarter of fiscal 2019 increased compared to last year's third quarter to $14.7 million driven mainly by increased marine technology products sales. Marine technology products sales increased 55% to $9.3 million in the third quarter of fiscal 2019 compared to $6.0 million in last year's third quarter. Seamap sales increased 51% versus the prior year period, and Klein sales increased 104% compared to the same period last year. Third quarter sales consisted of approximately $5.5 million of Seamap, $3.1 million from Klein (including $409,000 of inter-company sales which are eliminated in consolidation) and $1.1 million by SAP.
Equipment leasing revenues for the third quarter of fiscal 2019, excluding lease pool equipment sales, were $3.2 million, an increase of 53% compared to the same period last year. Lease pool equipment sales were $867,000 in the third quarter of fiscal 2019 compared to $247,000 in the third quarter a year ago. Other equipment sales were $1.3 million in the third quarter of fiscal 2019 compared to $412,000 in the third quarter a year ago.
Lease pool depreciation expense in the third quarter of fiscal 2019 decreased to $2.2 million from $3.6 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 decreased slightly to $4.8 million in the third quarter of fiscal 2019 versus $4.9 million in the third quarter of fiscal 2018, despite the effect of increased activity and costs related to the SeaLink product line in the fiscal 2019 period. These costs in the third quarter of fiscal 2019 declined significantly from $5.5 million in the second quarter this year as a result of various cost reduction initiatives. As a percentage of revenues, SG&A expenses in the third quarter of 2019 declined to 33% from 56% in last year's third quarter.
CONFERENCE CALL
We have scheduled a conference call for Thursday, December 6 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2019 third 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 December 13, 2018 and may be accessed by calling (201) 612-7415 and using passcode 13685463#. 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, Malaysia, 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 October 31, 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.
Contacts:
Rob Capps, Co-CEO
Mitcham Industries, Inc.
936-291-2277
Jack Lascar /Mark Roberson
Dennard Lascar Investor
Relations
713-529-6600
Tables to Follow
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
October 31, 2018 January 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $
5,406 $
9,902
Restricted cash 213 244
Accounts and contracts receivable, net of allowance for
doubtful accounts of $3,108 and $3,885 at October 31, 2018
and January 31, 2018, respectively 17,440 10,494
Inventories, net 11,679 10,856
Prepaid expenses and other current assets 1,603 1,550
Total current assets 36,341 33,046
Seismic equipment lease pool and property and equipment, net 16,655 22,900
Intangible assets, net 10,911 8,015
Goodwill 2,531 2,531
Non-current prepaid income taxes 1,434 1,609
Deferred tax asset 58
Long-term receivables, net of allowance for doubtful accounts
of $532 and $2,282 at
October 31, 2018 and January
31, 2018, respectively - 4,652
Other assets 609 926
Total assets $
68,539 $
73,679
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $
2,096 $
1,271
Deferred revenue 156 741
Accrued expenses and other current liabilities 5,477 5,253
Income taxes payable 556 258
Total current liabilities 8,285 7,523
Deferred tax liability - 307
Total liabilities 8,285 7,830
Shareholders' equity:
Preferred stock, $1.00 par value; 1,000 shares authorized; 798
and 532 shares issued and
outstanding at October
31, 2018 and January 31, 2018, respectively 17,612 11,544
Common stock, $0.01 par value; 20,000 shares authorized;
14,049 and 14,019 shares issued
at October 31,
2018 and January 31, 2018, respectively 140 140
Additional paid-in capital 122,879 122,304
Treasury stock, at cost (1,929 shares at October 31, 2018 and
January 31, 2018) (16,860) (16,860)
Accumulated deficit (59,355) (42,425)
Accumulated other comprehensive loss (4,162) (8,854)
Total shareholders' equity 60,254 65,849
Total liabilities and shareholders' equity $
68,539 $
73,679
===
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three Months Ended For the Nine Months Ended
October 31, October 31,
2018 2017 2018 2017
Revenues:
Sale of marine technology products $
9,277 $
5,955 $
18,720 $
22,429
Equipment leasing 3,166 2,071 7,493 5,765
Sale of lease pool and other equipment 2,208 618 4,401 9,719
Total revenues 14,651 8,644 30,614 37,913
Cost of sales:
Sale of marine technology products 4,904 3,132 10,206 12,975
Equipment leasing (including lease pool
depreciation) 3,296 4,400 10,120 13,815
Lease pool equipment sales 1,227 211 1,959 6,410
Total cost of sales 9,427 7,743 22,285 33,200
Gross profit 5,224 901 8,329 4,713
Operating expenses:
Selling, general and administrative 4,819 4,879 15,953 14,508
Research and development 175 299 857 637
Provision for doubtful accounts 200
Depreciation and amortization 579 516 1,816 1,622
Total operating expenses 5,573 5,694 18,826 16,767
Operating loss (349) (4,793) (10,497) (12,054)
Other income (expense):
Loss on sale (including $5,355 of cumulative
translation loss) (4,905) (4,905)
Interest income, net 12 52 47 23
Other, net (198) 46 (57) (107)
Total other (expense) income (5,091) 98 (4,915) (84)
Loss before income taxes (5,440) (4,695) (15,412) (12,138)
Benefit (provision) for income taxes 249 (586) (273) (1,172)
Net loss $
(5,191) $
(5,281) $
(15,685) $
(13,310)
Preferred stock dividends (449) (229) (1,245) (630)
Net loss attributable to common shareholders $
(5,640) $
(5,510) $
(16,930) $
(13,940)
Net loss per common share:
Basic $
(0.47) $
(0.46) $
(1.40) $
(1.15)
Diluted $
(0.47) $
(0.46) $
(1.40) $
(1.15)
Shares used in computing loss per common
share:
Basic 12,119 12,087 12,100 12,082
Diluted 12,119 12,087 12,100 12,082
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Nine Months Ended October 31,
2018 2017
Cash flows from operating activities:
Net loss $
(15,685) $
(13,310)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 9,184 13,219
Stock-based compensation 575 685
Provision for inventory obsolescence 140 58
Provision for doubtful accounts, net of charge offs 200
Gross profit from sale of lease pool equipment (1,848) (3,080)
Loss on sale of business 4,905
Deferred tax expense (365) (31)
Non-current prepaid tax 472
Changes in:
Trade accounts and contracts receivable (878) 5,129
Unbilled revenue (2,435)
Inventories (1,304) 79
Prepaid expenses and other current assets (1,158) 207
Income taxes receivable and payable 714
Accounts payable, accrued expenses and other current
liabilities (626) (1,244)
Deferred revenue 527
Foreign exchange losses net of gains 336 (252)
Net cash (used in) provided by operating activities (7,960) 2,174
Cash flows from investing activities:
Purchases of seismic equipment held for lease (1,424) (321)
Acquisition of assets (3,000)
Purchases of property and equipment (696) (276)
Sales of used lease pool equipment 4,124 6,690
Sale of business, net of cash sold (147)
Net cash (used in) provided by investing activities (1,143) 6,093
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 6,135 1,847
Preferred stock dividends (1,245) (630)
Net cash provided by (used in) financing activities 4,890 (5,090)
Effect of changes in foreign exchange rates on cash,
cash equivalents and restricted cash (314) 82
Net (decrease) increase in cash, cash equivalents and
restricted cash (4,527) 3,259
Cash, cash equivalents and restricted cash, beginning
of period 10,146 3,511
Cash, cash equivalents and restricted cash, end of
period $
5,619 $
6,770
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 For the Nine Months Ended
October 31, October 31,
2018 2017 2018 2017
(in thousands)
(in thousands)
Reconciliation of Net loss to
EBITDA and Adjusted EBITDA
Net loss $
(5,191) $
(5,281) $
(15,685) $
(13,310)
Interest income, net (12) (52) (47) (23)
Depreciation and amortization 2,785 4,124 9,184 13,219
(Benefit) provision for income
taxes (249) 586 273 1,172
EBITDA (1) (2,667) (623) (6,275) 1,058
Non-cash foreign exchange
(gains) losses 5,605 (41) 5,618 320
Stock-based compensation 207 224 575 685
Cost of lease pool sales 265 34 899 6,228
Adjusted EBITDA (1) $
3,410 $
(406) $
817 $
8,291
Reconciliation of Net cash
provided by operating
activities to EBITDA
Net cash (used in) provided by
operating activities $
(2,161) $
(1,912) $
(7,960) $
2,174
Stock-based compensation (207) (224) (575) (685)
Provision for doubtful accounts (200)
Provision for inventory
obsolescence (25) 9 (140) (58)
Changes in trade accounts,
contracts and notes receivable 5,199 748 3,313 (5,129)
Interest (received) paid (36) 2 84
Taxes paid, net of refunds 146 277 414 436
Gross profit from sale of lease
pool equipment 602 228 1,848 3,080
Loss from sale of MSE (4,905) (4,905)
Changes in inventory (102) (186) 1,304 (79)
Changes in accounts payable,
accrued expenses and other
current liabilities and
deferred revenue (511) 315 98 1,244
Changes in prepaid expenses and
other current assets (277) (6) 1,158 (207)
Foreign exchange (losses) gains,
net (272) 181 (336) 252
Other (154) (17) (296) (54)
EBITDA (1) $
(2,667) $
(623) $
(6,275) $
1,058
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. 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 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 and 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 For the Nine Months Ended
October 31, October 31,
2018 2017 2018 2017
Revenues:
Marine technology products $
9,305 $
5,992 $
19,025 $
22,565
Equipment leasing 5,386 2,730 11,906 15,546
Inter-segment sales (40) (78) (317) (198)
Total revenues 14,651 8,644 30,614 37,913
Cost of sales:
Marine technology products 4,918 3,174 10,497 13,116
Equipment leasing 4,535 4,647 12,091 20,282
Inter-segment costs (26) (78) (303) (198)
Total cost of sales 9,427 7,743 22,285 33,200
Gross profit 5,224 901 8,329 4,713
Operating expenses:
Selling, general and
administrative 4,819 4,879 15,953 14,508
Research and development 175 299 857 637
Provision for doubtful
accounts 200
Depreciation and amortization 579 516 1,816 1,622
Total operating expenses 5,573 5,694 18,826 16,767
Operating loss $
(349) $
(4,793) $
(10,497) $
(12,054)
Marine Technology Products
Segment:
Revenues:
Seamap $
5,537 $
3,676 $
11,103 $
16,053
Klein 3,092 1,517 6,195 3,456
SAP 1,085 1,087 2,362 3,998
Intra-segment sales (409) (288) (635) (942)
9,305 5,992 19,025 22,565
Cost of sales:
Seamap 2,869 1,671 5,498 8,438
Klein 1,553 894 3,679 2,571
SAP 905 896 1,969 3,158
Intra-segment sales (409) (287) (649) (1,051)
4,918 3,174 10,497 13,116
Gross profit $
4,387 $
2,818 $
8,528 $
9,449
Gross profit margin 47 47 45 42
% % % %
Equipment Leasing Segment:
Revenue:
Equipment leasing $
3,178 $
2,071 $
7,505 $
5,765
Lease pool equipment sales 867 247 2,748 9,309
Other equipment sales 1,341 412 1,653 472
5,386 2,730 11,906 15,546
Cost of sales:
Direct costs-equipment
leasing 1,132 858 2,857 2,363
Lease pool depreciation 2,176 3,578 7,275 11,509
Cost of lease pool equipment
sales 265 34 899 6,228
Cost of other equipment sales 962 177 1,060 182
4,535 4,647 12,091 20,282
Gross profit (loss) $
851 $
(1,917) $
(185) $
(4,736)
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SOURCE Mitcham Industries, Inc.
