Mitcham Industries Reports Fiscal 2020 Second Quarter Results
THE WOODLANDS, Texas, Sept. 4, 2019 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("Mitcham" or "the Company") today announced financial results for its fiscal 2020 second quarter ended July 31, 2019.
Total revenues for the second quarter of fiscal 2020 increased 7% to $8.9 million, compared to $8.4 million in the second quarter of fiscal 2019. The improvement was driven primarily by further growth within the Marine Technology Products segment. Revenues from the Marine Technology Products segment rose 12% to $6.7 million in the second quarter, compared to $6.0 million in the same period last year. Revenue from the Equipment Leasing segment was $2.2 million in the second quarter, down 12% from $2.5 million in the same period last year.
The Company reported a net loss of $3.1 million in the second quarter of fiscal 2020 compared to a net loss of $4.6 million in the same period during fiscal 2019. The net loss attributable to common shareholders of $3.6 million, or $(0.30) per share, in the second quarter of fiscal 2020 improved from a loss of $5.0 million, or $(0.41) per share, in the second quarter of fiscal 2019.
Adjusted EBITDA for the second quarter of fiscal 2020 was a loss of $1.0 million, relatively flat with the loss of approximately $1.1 million in the same period last year. Adjusted EBITDA, which is a non-GAAP measure, 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 fiscal 2020 second quarter results came in as expected. We continue to see encouraging order activity for our Marine Technology products segment and saw a 12% year-over-year increase in top-line growth this quarter. Our revenues were affected mostly by the delay of seismic source controller orders that appear to have been pushed out until later this year. However, our backlog of firm orders continues to grow and reached approximately $14 million as of July 31, 2019, an increase of 27% from $11.0 million at April 30, 2019 and up from $8.7 million at January 31, 2019. Orders for our new MA-X sonar technology contributed to our backlog growth. We ramped up our research and development expenses by 60% in the quarter as we continue to expand our technology offerings and respond to specific customer requests.
"As we continue to implement our strategic shift away from energy-dependent markets, we are making progress expanding our position in marine markets with our new technology and products. For example, we are seeing new opportunities for commercial and military programs, fueled in part, we believe, by some of our recent technology developments. We are also working on a number of fronts to form partnerships with others as another means of expanding our product and technology offerings," added Capps. "The flow of firm orders in the marine seismic market, specifically for source controller solutions, has been slower than we anticipated. Our customers have shown us a number of instances in which enhancements in technology are desired, or even necessary. However, most customers have been reluctant to pull the trigger on committing the capital necessary for the enhancements. We remain confident that these opportunities will come to fruition, but the timing continues to be uncertain.
"In the Equipment Leasing segment, we saw a 12% decline in top-line growth, as expected. While we believe that this business will not return to historical levels this year, we are seeing opportunities within this part of our business, particularly in Europe.
"Regarding our financial position, our capital structure remains strong, with no funded debt on our balance sheet and ample liquidity, including cash and cash equivalents of $7.6 million as of July 31, 2019. Overall, we are very pleased with the steady pace of order activity so far this year although the uncertainty surrounding the global economy, which has impacted capital availability and product demand, has caused some of our customers to delay the timing of certain order deliveries. For this reason, we now expect to produce positive operating income by the fourth quarter of this fiscal year rather than completing our full fiscal year in positive territory."
FISCAL 2020 SECOND QUARTER RESULTS
Total revenues for the second quarter of fiscal 2020 increased compared to last year's second quarter to $8.9 million, driven by higher marine technology products sales. Marine technology products segment sales increased to $6.7 million in the second quarter of fiscal 2020 compared to $6.0 million in last year's second quarter. Seamap sales increased 29% from the prior year period to $4.9 million, and Klein sales increased 16% compared to the same period last year to $1.8 million. Included in last year's second quarter sales was a $797,000 contribution from SAP, which was sold in the first quarter of fiscal 2020 and therefore, not included in the recent quarterly results.
Total Equipment leasing revenues were $2.2 million in the second quarter of fiscal 2020 compared to $2.5 million in the same period last year. Equipment leasing revenues, excluding equipment sales, were $1.4 million, a decrease of 16% compared to the same period last year. Lease pool equipment sales were $455,000 in the second quarter of fiscal 2020 compared to $718,000 in the second quarter a year ago. Other equipment sales were $347,000 in the second quarter of fiscal 2019 compared to $125,000 in the second quarter a year ago.
Lease pool depreciation expense in the second quarter of fiscal 2020 decreased 53% to $1.1 million from $2.4 million in the same period a year ago due to lease pool sales and minimal purchase of lease pool equipment in recent periods.
Selling, general and administrative expenses were $4.8 million in the second quarter of fiscal 2020 compared to $5.5 million in the second quarter of fiscal 2019 and $5.2 million in the first quarter of fiscal 2019. As a percentage of revenues, SG&A expenses in the second quarter of 2020 decreased to 54% from 66% in last year's second quarter.
CONFERENCE CALL
Management has scheduled a conference call for Thursday, September 5 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss fiscal 2020 second 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 September 12, 2019 and may be accessed by calling (201) 612-7415 and using passcode 13693821#. 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 Dennard Lascar Investor Relations (713) 529?6600 or email mind@dennardlascar.com.
About Mitcham Industries
Mitcham Industries, Inc. provides technology to the oceanographic, hydrographic, defense, seismic and security industries. Headquartered in The Woodlands, Texas, Mitcham has a global presence with operating locations in the United States, Canada, 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.
Forward-looking Statements
Certain statements and information in this press release concerning results for the quarter ended July 31, 2019 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
Ken Dennard /Zach Vaughan
Dennard Lascar Investor
Relations
713-529-6600
Tables to Follow
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
July 31, 2019 January 31, 2019
ASSETS
Current assets:
Cash and cash equivalents $
7,489 $
9,389
Restricted cash 150 160
Accounts receivable, net of allowance for doubtful accounts of
$2,073 and $2,113
at July 31, 2019 and January 31,
2019, respectively 10,649 12,082
Inventories, net 13,115 10,774
Prepaid expenses and other current assets 3,323 1,735
Assets held for sale - 2,202
Total current assets 34,726 36,342
Seismic equipment lease pool and property and equipment, net 11,841 14,155
Operating lease right-of-use assets 2,738
Intangible assets, net 9,909 10,495
Goodwill 2,531 2,531
Deferred tax asset 68 68
Long-term receivables, net of allowance for doubtful accounts
of $- at
July 31, 2019 and January 31, 2019 90 712
Other assets 1,144 712
Long-term assets held for sale - 286
Total assets $
63,047 $
65,301
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $
1,977 $
1,534
Deferred revenue 405 1,040
Accrued expenses and other current liabilities 4,650 3,738
Income taxes payable 177 224
Operating lease liabilities - current 720
Liabilities held for sale - 892
Total current liabilities 7,929 7,428
Operating lease liabilities - non-current 2,018
Other non-current liabilities 1,086 1,195
Total liabilities 11,033 8,623
Shareholders' equity:
Preferred stock, at cost, $1.00 par value; 1,000 shares
authorized; 917 and 830 shares issued and
outstanding at July 31, 2019 and January 31, 2019,
respectively 20,310 18,330
Common stock, $0.01 par value; 20,000 shares authorized;
14,058 and 14,049 shares issued at
July 31, 2019,
and January 31, 2019, respectively 141 140
Additional paid-in capital 123,452 123,085
Treasury stock, at cost (1,929 shares at July 31, 2019 and
January 31, 2019) (16,860) (16,860)
Accumulated deficit (70,494) (63,973)
Accumulated other comprehensive loss (4,535) (4,044)
Total shareholders' equity 52,014 56,678
Total liabilities and shareholders' equity $
63,047 $
65,301
===
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
For the Three Months Ended For the Six Months Ended
July 31,
July 31,
2019 2018 2019 2018
Revenues:
Sale of marine technology products $
6,723 $
5,877 $
12,700 $
9,443
Equipment leasing 1,374 1,630 4,697 4,327
Sale of lease pool and other equipment 801 843 1,358 2,193
Total revenues 8,898 8,350 18,755 15,963
Cost of sales:
Sale of marine technology products 3,887 3,216 7,342 5,302
Equipment leasing (including lease pool
depreciation) 1,880 3,242 4,291 6,824
Equipment sales 249 32 499 732
Total cost of sales 6,016 6,490 12,132 12,858
Gross profit 2,882 1,860 6,623 3,105
Operating expenses:
Selling, general and administrative 4,795 5,504 10,027 11,134
Research and development 498 312 813 682
Provision for doubtful accounts 200
Depreciation and amortization 651 620 1,301 1,237
Total operating expenses 5,944 6,436 12,141 13,253
Operating loss (3,062) (4,576) (5,518) (10,148)
Other income (expense):
Interest (expense) income, net (11) 17 (22) 35
Other, net (15) 55 92 141
Total other (expense) income (26) 72 70 176
Loss before income taxes (3,088) (4,504) (5,448) (9,972)
Provision for income taxes (48) (85) (103) (522)
Net loss $
(3,136) $
(4,589) $
(5,551) $
(10,494)
Preferred stock dividends (499) (411) (970) (796)
Net loss attributable to common shareholders $
(3,635) $
(5,000) $
(6,521) $
(11,290)
Net loss per common share:
Basic $
(0.30) $
(0.41) $
(0.54) $
(0.93)
Diluted $
(0.30) $
(0.41) $
(0.54) $
(0.93)
Shares used in computing loss per common
share:
Basic 12,128 12,093 12,124 12,090
Diluted 12,128 12,093 12,124 12,090
MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Six Months Ended
July 31,
2019 2018
Cash flows from operating activities:
Net loss $
(5,551) $
(10,494)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 3,960 6,399
Stock-based compensation 341 368
Provision for doubtful accounts, net of charge offs 200
Provision for inventory obsolescence 115
Gross profit from sale of lease pool equipment (780) (1,246)
Deferred tax expense 135 (306)
Changes in:
Accounts receivable 100 2,227
Unbilled revenue 3 (341)
Inventories (2,372) (1,406)
Prepaid expenses and other current assets (11) (1,435)
Income taxes receivable and payable (47) 665
Accounts payable, accrued expenses and other current
liabilities 632 (1,551)
Deferred revenue (50) 942
Foreign exchange losses net of gains 137 64
Net cash used in operating activities (3,503) (5,799)
Cash flows from investing activities:
Purchases of seismic equipment held for lease (230) (1386)
Acquisition of assets (3,000)
Purchases of property and equipment (573) (487)
Sale of used lease pool equipment 1,186 2,792
Sale of business, net of cash sold 239
Net cash provided by (used in) investing activities 622 (2,081)
Cash flows from financing activities:
Proceeds from exercise of stock options 26
Net proceeds from preferred stock offering 1,980 5,450
Preferred stock dividends (970) (796)
Net cash provided by financing activities 1,036 4,654
Effect of changes in foreign exchange rates on cash,
cash equivalents and restricted cash (65) 189
Net decrease in cash, cash equivalents and restricted
cash (1,910) (3,037)
Cash, cash equivalents and restricted cash, beginning
of period 9,549 10,146
Cash, cash equivalents and restricted cash, end of
period $
7,639 $
7,109
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 Six Months Ended
July 31,
July 31,
2019 2018 2019 2018
(in thousands)
(in thousands)
Reconciliation of Net loss to
EBITDA and Adjusted EBITDA
Net loss $
(3,136) $
(4,589) $
(5,551) $
(10,494)
Interest expense (income), net 11 (17) 22 (35)
Depreciation and amortization 1,829 3,096 3,960 6,399
Provision for income taxes 48 85 103 522
EBITDA (1) (1,248) (1,425) (1,466) (3,608)
Non-cash foreign exchange
losses 89 62 141 13
Stock-based compensation 169 242 341 368
Cost of lease pool sales 38 7 94 634
Adjusted EBITDA (1) $
(952) $
(1,114) $
(890) $
(2,593)
Reconciliation of Net cash
provided by operating
activities to EBITDA
Net cash used in operating
activities $
(1,652) $
(2,433) $
(3,503) $
(5,799)
Stock-based compensation (169) (242) (341) (368)
Provision for doubtful accounts (200)
Provision for inventory
obsolescence (115) (115)
Changes in accounts receivable
(current and long-term) (27) (398) (103) (1,886)
Interest paid 13 1 27 2
Taxes paid, net of refunds 85 222 182 268
Gross profit from sale of lease
pool equipment 417 710 780 1,246
Changes in inventory 1,871 562 2,372 1,406
Changes in accounts payable,
accrued expenses and other
current liabilities and
deferred revenue (987) 875 (582) 609
Changes in prepaid expenses and
other current assets (661) (85) 11 1,435
Foreign exchange losses, net (153) (48) (137) (64)
Other 15 (474) (172) (142)
EBITDA (1) $
(1,248) $
(1,425) $
(1,466) $
(3,608)
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, stock-based
compensation and other non-cash tax
related items. 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 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 Six Months Ended
July 31,
July 31,
2019 2018 2019 2018
Revenues:
Marine technology products $
6,745 $
6,012 $
12,727 $
9,720
Equipment leasing 2,175 2,473 6,110 6,520
Inter-segment sales (22) (135) (82) (277)
Total revenues 8,898 8,350 18,755 15,963
Cost of sales:
Marine technology products 3,909 3,351 7,424 5,579
Equipment leasing 2,129 3,274 4,790 7,556
Inter-segment costs (22) (135) (82) (277)
Total cost of sales 6,016 6,490 12,132 12,858
Gross profit 2,882 1,860 6,623 3,105
Operating expenses:
Selling, general and
administrative 4,795 5,504 10,027 11,134
Research and development 498 312 813 682
Provision for doubtful
accounts 200
Depreciation and amortization 651 620 1,301 1,237
Total operating expenses 5,944 6,436 12,141 13,253
Operating loss $
(3,062) $
(4,576) $
(5,518) $
(10,148)
Marine Technology Products
Segment:
Revenues:
Seamap $
4,904 $
3,814 $
9,228 $
5,566
Klein 1,841 1,591 3,402 3,103
SAP 797 101 1,277
Intra-segment sales (190) (4) (226)
6,745 6,012 12,727 9,720
Cost of sales:
Seamap 2,307 1,785 4,630 2,629
Klein 1,602 1,090 2,703 2,126
SAP 666 95 1,064
Intra-segment sales (190) (4) (240)
3,909 3,351 7,424 5,579
Gross profit $
2,836 $
2,661 $
5,303 $
4,141
Gross profit margin 42 44 42 43
% % % %
Equipment Leasing Segment:
Revenue:
Equipment leasing $
1,373 $
1,630 $
4,751 $
4,327
Lease pool equipment sales 455 718 874 1,881
Other equipment sales 347 125 485 312
2,175 2,473 6,110 6,520
Cost of sales:
Direct costs-equipment
leasing 737 797 1,702 1,725
Lease pool depreciation 1,143 2,445 2,589 5,099
Cost of lease pool equipment
sales 38 7 94 634
Cost of other equipment sales 211 25 405 98
2,129 3,274 4,790 7,556
Gross profit (loss) $
46 $
(801) $
1,320 $
(1,036)
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SOURCE Mitcham Industries, Inc.
