Mitcham Industries Reports Fiscal 2020 Third Quarter Results
THE WOODLANDS, Texas, Dec. 4, 2019 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("Mitcham" or "the Company") today announced financial results for its fiscal 2020 third quarter ended October 31, 2019.
Total revenues for the third quarter of fiscal 2020 was $10.7 million, compared to $8.9 million in the second quarter of fiscal 2020 and $14.7 million in the third quarter of fiscal 2019. The 20% sequential improvement was driven primarily by further growth within the Marine Technology Products segment. Year-over-year declines in revenue were primarily due to several sizeable system deliveries during the last year's third quarter, as well as incremental revenue contributions from our former Australian subsidiary, SAP, which has since been sold and is no longer a part of the Company's operations.
The Company reported a net loss of $2.0 million in the third quarter of fiscal 2020, compared to a net loss of $3.1 million in the second quarter of fiscal 2020, and a net loss of $5.2 million in the third quarter of fiscal 2019. Third quarter of fiscal 2020 net loss attributable to common shareholders was $2.6 million, or $(0.21) per share, compared to a loss of $3.6 million, or $(0.30) per share, in the second quarter of fiscal 2019, and a loss of $5.6 million, or $(0.47) per share, in the third quarter of fiscal 2019.
Adjusted EBITDA for the third quarter of fiscal 2020 was $198,000, compared to a loss of $1.0 million in the second quarter of fiscal 2020 and Adjusted EBITDA of $3.4 million in the third quarter of fiscal 2019. 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 third quarter results came in slightly better than expected. We continue our strategic shift as we expanded our position in marine markets with our new technology and products. Our Marine Technology Products segment has accounted for approximately 70% of our total revenues so far this year. We saw sequential improvement this quarter not just in revenues, but also in operating income and adjusted EBITDA.
"As mentioned previously, we are working on a number of fronts to expand our product and technology offerings. We continued to increase our research and development expenses in the quarter and are exploring a number of initiatives to partner with others in order to expand our technology offerings in response to customer requirements. Order activity for our Marine Technology products segment remains robust with a firm order backlog of $12.5 million at the end of the third quarter. As indicated by order activity that we announced recently, we are still seeing healthy levels of customer interest and a number of inquiries for technologies such as BuoyLink, SeaLink and MA-X.
"Regarding our financial position, our capital structure remains strong, with no funded debt on our balance sheet and ample liquidity. We expect to produce positive Adjusted EBITDA and operating income in the fourth quarter of this fiscal year and believe we will maintain this momentum going into fiscal 2021," concluded Capps.
CONFERENCE CALL
Management has scheduled a conference call for Thursday, December 5(th )at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss fiscal 2020 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 12, 2019 and may be accessed by calling (201) 612-7415 and using passcode 13696799#. 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 October 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) October 31, 2019 January 31, 2019 ASSETS Current assets: Cash and cash equivalents $ 4,650 $ 9,389 Restricted cash 149 160 Accounts receivable, net of allowance for doubtful accounts of $2,069 and $2,113 at October 31, 2019 and January 31, 2019, respectively 12,947 12,082 Inventories, net 13,559 10,774 Prepaid expenses and other current assets 1,521 1,735 Assets held for sale - 2,202 Total current assets 32,826 36,342 Seismic equipment lease pool and property and equipment, net 14,021 14,155 Operating lease right-of-use assets 2,455 Intangible assets, net 9,453 10,495 Goodwill 2,531 2,531 Deferred tax asset 68 68 Long-term receivables, net of allowance for doubtful accounts of $- at October 31, 2019 and January 31, 2019 - 712 Other assets 1,142 712 Long-term assets held for sale - 286 Total assets $ 62,496 $ 65,301 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,483 $ 1,534 Deferred revenue 210 1,040 Accrued expenses and other current liabilities 5,174 3,738 Income taxes payable 65 224 Operating lease liabilities - current 367 Liabilities held for sale - 892 Total current liabilities 9,299 7,428 Operating lease liabilities - non-current 2,088 Other non-current liabilities 1,031 1,195 Total liabilities 12,418 8,623 Shareholders' equity: Preferred stock, at cost, $1.00 par value; 1,000 shares authorized; 928 and 830 shares issued and outstanding at October 31, 2019 and January 31, 2019, respectively 20,540 18,330 Common stock, $0.01 par value; 20,000 shares authorized; 14,097 and 14,049 shares issued at October 31, 2019, and January 31, 2019, respectively 141 140 Additional paid-in capital 123,721 123,085 Treasury stock, at cost (1,929 shares at October 31, 2019 and January 31, 2019) (16,860) (16,860) Accumulated deficit (73,044) (63,973) Accumulated other comprehensive loss (4,420) (4,044) Total shareholders' equity 50,078 56,678 Total liabilities and shareholders' equity $ 62,496 $ 65,301 ===
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, O ctober 31, 2019 2018 2019 2018 Revenues: Sale of marine technology products $ 8,062 $ 9,277 $ 20,762 $ 18,720 Equipment leasing 2,305 3,166 7,002 7,493 Sale of lease pool and other equipment 296 2,208 1,654 4,401 Total revenues 10,663 14,651 29,418 30,614 Cost of sales: Sale of marine technology products 4,728 4,904 12,070 10,206 Equipment leasing (including lease pool depreciation) 1,833 3,296 6,124 10,120 Equipment sales 51 1,227 550 1,959 Total cost of sales 6,612 9,427 18,744 22,285 Gross profit 4,051 5,224 10,674 8,329 Operating expenses: Selling, general and administrative 4,705 4,819 14,732 15,953 Research and development 629 175 1,442 857 Provision for doubtful accounts - 200 Depreciation and amortization 646 579 1,947 1,816 Total operating expenses 5,980 5,573 18,121 18,826 Operating loss (1,929) (349) (7,447) (10,497) Other income (expense): Loss on sale (including $5,355 of net cumulative translation loss) - (4,905) (4,905) Interest (expense) income, net (12) 12 (34) 47 Other, net (27) (198) 65 (57) Total other (expense) income (39) (5,091) 31 (4,915) Loss before income taxes (1,968) (5,440) (7,416) (15,412) (Provision) benefit for income taxes (60) 249 (163) (273) Net loss $ (2,028) $ (5,191) $ (7,579) $ (15,685) Preferred stock dividends (522) (449) (1,492) (1,245) Net loss attributable to common shareholders $ (2,550) $ (5,640) $ (9,071) $ (16,930) Net loss per common share: Basic $ (0.21) $ 0.47 $ (0.75) $ (1.40) Diluted $ (0.21) $ 0.47 $ (0.75) $ (1.40) Shares used in computing loss per common share: Basic 12,158 12,119 12,135 12,100 Diluted 12,158 12,119 12,135 12,100 ===
MITCHAM INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) For the Nine Months Ended October 31, 2019 2018 Cash flows from operating activities: Net loss $ (7,579) $ (15,685) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,806 9,184 Stock-based compensation 611 575 Provision for doubtful accounts, net of charge offs - 200 Provision for inventory obsolescence 23 140 Gross profit from sale of lease pool equipment (987) (1,848) Loss on sale of business - 4,905 Deferred tax expense 135 (365) Non-current prepaid income taxes (157) 472 Changes in: Accounts receivable (1,020) (878) Unbilled revenue (302) (2,435) Inventories (2,835) (1,304) Prepaid expenses and other current assets 240 (1,158) Accounts payable, accrued expenses and other current liabilities (392) (626) Deferred revenue 1,979 527 Foreign exchange losses net of gains 230 336 Net cash used in operating activities (4,248) (7,960) Cash flows from investing activities: Purchases of seismic equipment held for lease (1,939) (1,424) Acquisition of assets - (3,000) Purchases of property and equipment (893) (696) Sale of used lease pool equipment 1,415 4,124 Sale of business, net of cash sold 239 (147) Net cash used in investing activities (1,178) (1,143) Cash flows from financing activities: Proceeds from exercise of stock options 25 Net proceeds from preferred stock offering 2,211 6,135 Preferred stock dividends (1,492) (1,245) Net cash provided by financing activities 744 4,890 Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash (68) (314) Net decrease in cash, cash equivalents and restricted cash (4,750) (4,527) Cash, cash equivalents and restricted cash, beginning of period 9,549 10,146 Cash, cash equivalents and restricted cash, end of period $ 4,799 $ 5,619 ===
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, 2019 2018 2019 2018 (in thousands) (in thousands) Reconciliation of Net loss to EBITDA and Adjusted EBITDA Net loss $ (2,028) $ (5,191) $ (7,579) $ (15,685) Interest expense (income), net 12 (12) 34 (47) Depreciation and amortization 1,846 2,785 5,806 9,184 Provision (benefit) for income taxes 60 (249) 163 273 EBITDA (1) (110) (2,667) (1,576) (6,275) Non-cash foreign exchange losses 15 5,605 156 5,618 Stock-based compensation 270 207 611 575 Cost of lease pool sales 23 265 117 899 Adjusted EBITDA (1) $ 198 $ 3,410 $ (692) $ 817 Reconciliation of Net cash provided by operating activities to EBITDA Net cash used in operating activities $ (745) $ (2,161) $ (4,248) $ (7,960) Stock-based compensation (270) (207) (611) (575) Provision for doubtful accounts - (200) Provision for inventory obsolescence (23) (25) (23) (140) Changes in accounts receivable (current and long-term) 1,425 5,199 1,322 3,313 Interest paid 13 40 2 Taxes paid, net of refunds 143 146 325 414 Gross profit from sale of lease pool equipment 207 602 987 1,848 Loss on sale of subsidiaries - (4,905) (4,905) Changes in inventory 463 (102) 2,835 1,304 Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue (1,005) (511) (1,587) 98 Changes in prepaid expenses and other current assets (251) (277) (240) 1,158 Foreign exchange losses, net (93) (272) (230) (336) Other 26 (154) (146) (296) EBITDA (1) $ (110) $ (2,667) $ (1,576) $ (6,275) ===
(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. These non- GAAP financial measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, 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 Nine Months Ended October 31, October 31, 2019 2018 2019 2018 Revenues: Marine technology products $ 8,065 $ 9,305 $ 20,792 $ 19,025 Equipment leasing 2,622 5,386 8,732 11,906 Inter-segment sales (24) (40) (106) (317) Total revenues 10,663 14,651 29,418 30,614 Cost of sales: Marine technology products 4,752 4,918 12,176 10,497 Equipment leasing 1,884 4,535 6,674 12,091 Inter-segment costs (24) (26) (106) (303) Total cost of sales 6,612 9,427 18,744 22,285 Gross profit 4,051 5,224 10,674 8,329 Operating expenses: Selling, general and administrative 4,705 4,819 14,732 15,953 Research and development 629 175 1,442 857 Provision for doubtful accounts 200 Depreciation and amortization 646 579 1,947 1,816 Total operating expenses 5,980 5,573 18,121 18,826 Operating loss $ (1,929) $ (349) $ (7,447) $ (10,497) Marine Technology Products Segment: Revenues: Seamap $ 5,684 $ 5,537 $ 14,912 $ 11,103 Klein 2,381 3,092 5,783 6,195 SAP 1,085 101 2,362 Intra-segment sales (409) (4) (635) 8,065 9,305 20,792 19,025 Cost of sales: Seamap 3,177 2,869 7,807 5,498 Klein 1,575 1,553 4,278 3,679 SAP 905 95 1,969 Intra-segment sales (409) (4) (649) 4,752 4,918 12,176 10,497 Gross profit $ 3,313 $ 4,387 $ 8,616 $ 8,528 Gross profit margin 41 47 41 45 % % % % Equipment Leasing Segment: Revenue: Equipment leasing $ 2,326 $ 3,178 $ 7,077 $ 7,505 Lease pool equipment sales 230 867 1,104 2,748 Other equipment sales 66 1,341 551 1,653 2,622 5,386 8,732 11,906 Cost of sales: Direct costs- equipment leasing 665 1,132 2,367 2,857 Lease pool depreciation 1,168 2,176 3,757 7,275 Cost of lease pool equipment sales 23 265 117 899 Cost of other equipment sales 28 962 433 1,060 1,884 4,535 6,674 12,091 Gross profit (loss) $ 738 $ 851 $ 2,058 $ (185)
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