NEWS RELEASE
Contacts: | Billy F. Mitcham, Jr., President & CEO Mitcham Industries, Inc. 936-291-2277 | |
Jack Lascar / Karen Roan |
FOR IMMEDIATE RELEASE
Dennard Rupp Gray & Easterly (DRG&E)
713-529-6600
MITCHAM INDUSTRIES REPORTS
FISCAL 2009 FIRST QUARTER RESULTS
• | Leasing revenue up 23% |
• | Pre-tax earnings up 12% |
• | Seamap gross profit up 33% |
HOUSTON – JUNE 2, 2008– Mitcham Industries, Inc. (NASDAQ: MIND) (the “Company”) today announced financial results for its fiscal 2009 first quarter ended April 30, 2008.
The Company reported net income for the first quarter of fiscal 2009 of $4.3 million, or $0.41 per diluted share, compared to $3.9 million, or $0.39 per diluted share, for the first quarter of fiscal 2008. Total revenues for the first quarter of fiscal 2009 were $18.5 million compared to $23.0 million in the first quarter of fiscal 2008.
Bill Mitcham, the Company’s President and CEO, stated, “We are quite pleased with our first quarter results. As we begin fiscal 2009, our core equipment leasing business remains robust, generating revenues of $12.4 million, a 23 percent increase over last year’s first quarter. This represents the best quarter of leasing revenue in the Company’s history and reflects the strong and sustained growth that the seismic industry has experienced in recent periods. We benefited from a strong winter season in Canada, Alaska and Russia, as well as renewed activity in such areas as South America and the Pacific Rim. The additions to our equipment lease pool over the last two years have provided a solid base from which to take advantage of these market conditions.
“As expected, Seamap sales for the quarter were substantially below last year’s first quarter; however, despite lower revenues, Seamap’s gross profit increased 33 percent over the first quarter of fiscal 2008. This represents a first quarter fiscal 2009 gross profit margin of 53 percent, a substantial improvement from the 21 percent gross margin achieved in the first quarter of fiscal 2008. We are especially proud of this profitability improvement.
“We believe the seismic industry is currently experiencing a period of sustained growth as high commodity prices continue to drive oil and gas exploration, reflecting the need to explore and discover untapped hydrocarbon resources. Going forward, we expect to benefit from this environment as a global participant in the seismic industry.”
FIRST QUARTER FISCAL 2009 RESULTS
Total revenues for the first quarter of fiscal 2009 declined by almost 20 percent to $18.5 million from $23.0 million in the fiscal 2008 first quarter. First quarter fiscal 2008 revenues, specifically Seamap sales, included approximately $5.9 million in unusual items, comprised of approximately $2.4 million in sales that had been deferred from the fourth quarter of fiscal 2007 and approximately $3.5 million in sales related to high value, but low margin, ancillary equipment that Seamap generally does not sell. Absent these items, total revenues for the first quarter of fiscal 2008 would have been approximately $17.1 million.
Core revenues from equipment leasing, excluding equipment sales, increased 23 percent to $12.4 million from $10.1 million in the same period a year ago, driven by continued improved demand for seismic equipment, development and growth in new geographic markets and expansion of the Company’s lease pool. During fiscal 2008, approximately $26 million of new equipment was added to the Company’s lease pool, including $13 million added in the fourth quarter that contributed considerably to first quarter leasing revenues.
Sales of new seismic, hydrographic and oceanographic equipment were $0.3 million compared to $2.2 million in the comparable period a year ago. Sales of lease pool equipment were $0.6 million compared to $0.7 million in the first quarter of fiscal 2008.
Seamap equipment sales in the first quarter declined 49 percent to $5.3 million from $10.4 million in the comparable period a year ago due to the approximately $5.9 million of unusual items mentioned above. Excluding these unusual items, Seamap equipment sales in the first quarter a year ago totaled approximately $4.5 million. Gross profit from the Seamap segment for the first quarter of fiscal 2009 was $2.8 million, or 53 percent of Seamap sales, compared to gross profit of $2.1 million, or 21 percent of Seamap sales, in the first quarter of fiscal 2008.
Total gross profit in the first quarter rose 15 percent to $11.6 million from $10.1 million in the first quarter of fiscal 2008. The improvement in overall gross profit was primarily attributable to increased leasing revenues, offset by higher lease pool depreciation, and the substantial improvement in Seamap’s gross profit margin.
General and administrative costs for the first quarter were $4.9 million, or 26 percent of revenues, versus $4.0 million, or 17 percent of total revenues, in the first quarter a year ago. The increase from a year ago is primarily due to generally higher personnel costs, as well as increased incentive compensation expenses.
Operating income for the first quarter was $6.4 million compared to $5.7 million in the comparable period a year ago. Earnings before income taxes for the first quarter increased 12 percent to $6.5 million from $5.8 million in the first quarter of last fiscal year.
EBITDA (net income before interest, taxes, depreciation and amortization) for the first quarter rose 23 percent to $10.4 million, or 56 percent of total revenues, compared to $8.5 million, or 37 percent of total revenues, in the same period last year. EBITDA, which is not a measure determined in accordance with generally accepted accounting principles (“GAAP”), is defined and reconciled to reported net income in Note A under the accompanying financial tables.
OUTLOOK
Robert Capps, Executive Vice President and Chief Financial Officer, stated, “Regarding our outlook for fiscal 2009, we continue to expect solid growth in our equipment leasing business. As stated previously, we generated exceptional revenue growth at Seamap during fiscal 2008 and thus do not expect Seamap’s revenues to be up in fiscal 2009; however, we do expect improved profit contributions from Seamap this fiscal year. Therefore, given our current pipeline of business and our fiscal 2009 outlook, we reaffirm our prior guidance for all of fiscal 2009 and continue to anticipate revenues to range between $78 million and $82 million, operating income to range between $18 million and $22 million, and earnings per share to range between $1.35 and $1.40 per diluted share.”
CONFERENCE CALL
The Company has scheduled a conference call for Tuesday, June 3, 2008 at 9:00 a.m. Eastern time to discuss fiscal 2009 first quarter results. To access the call, please dial (303) 262-2137 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 on that site and clicking “Investors.” A telephonic replay of the conference call will be available through June 10, 2008 and may be accessed by calling (303) 590-3000, and using the passcode 11114020#. A web cast archive will also be available athttp://www.mitchamindustries.com shortly after the call and will be accessible for approximately 90 days. For more information, please contact Donna Washburn at DRG&E at (713) 529-6600 or emaildmw@drg-e.com.
Mitcham Industries, Inc., a geophysical equipment supplier, offers for lease or sale, new and “experienced” seismic equipment to the oil and gas industry, seismic contractors, environmental agencies, government agencies and universities. Headquartered in Texas, with sales and services offices in Calgary, Canada; Brisbane, Australia; Singapore; Ufa, Bashkortostan, Russia; and the United Kingdom and with associates throughout Europe, South America and Asia, Mitcham conducts operations on a global scale and is the largest independent exploration equipment lessor in the industry.
This press release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included herein, including statements regarding the Company’s future financial position and results of operations, planned capital expenditures, the Company’s business strategy and other plans for future expansion, the future mix of revenues and business, future demand for the Company’s services and general conditions in the energy industry in general and seismic service industry, are forward-looking statements. Actual results may differ materially from such forward-looking statements. Important factors that could cause or contribute to such differences include the inherent volatility of oil and gas prices and the related volatility of demand for the Company’s services; loss of significant customers; significant defaults by customers on amounts due to the Company; international economic and political instability; dependence upon additional lease contracts; the risk of technological obsolescence of the Company’s lease pool; vulnerability of seismic activity and demand to weather conditions and seasonality of operating results; dependence upon few suppliers; and other factors that are disclosed in the Company’s 2008 Annual Report onForm 10-K and its other Securities and Exchange Commission filings and available from the Company without charge. All information in this release is as of the date of this release and the Company undertakes no duty to update or revise any forward-looking statement whether as a result of new information, future events or otherwise.
– Tables to follow –
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MITCHAM INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
April 30, 2008 | January 31, 2008 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,933 | $ | 13,884 | ||||
Accounts receivable, net | 16,343 | 12,816 | ||||||
Current portion of contracts receivable | 2,746 | 2,964 | ||||||
Inventories, net | 5,603 | 6,352 | ||||||
Deferred tax asset | 1,369 | 1,230 | ||||||
Prepaid expenses and other current assets | 1,122 | 1,491 | ||||||
Total current assets | 34,116 | 38,737 | ||||||
Seismic equipment lease pool and property and equipment, net | 55,289 | 53,179 | ||||||
Intangible assets, net | 3,533 | 3,692 | ||||||
Goodwill | 4,358 | 4,358 | ||||||
Net deferred tax asset | 619 | 1,505 | ||||||
Long-term portion of contracts receivable and other assets | 2,271 | 2,430 | ||||||
Total assets | $ | 100,186 | $ | 103,901 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,969 | $ | 16,729 | ||||
Current maturities — long-term debt | 4,863 | 1,500 | ||||||
Income taxes payable | 1,882 | 1,967 | ||||||
Deferred revenue | 504 | 872 | ||||||
Accrued expenses and other current liabilities | 4,507 | 3,674 | ||||||
Total current liabilities | 15,725 | 24,742 | ||||||
Non-current income taxes payable | 3,376 | 3,391 | ||||||
Total liabilities | 19,101 | 28,133 | ||||||
Shareholders’ equity: | ||||||||
Preferred stock, $1.00 par value; 1,000 shares authorized; none issued and outstanding | — | — | ||||||
Common stock $.01 par value; 20,000 shares authorized; 10,716 and 10,708 shares issued at April 30, 2008 and January 31, 2008, respectively | 107 | 107 | ||||||
Additional paid-in capital | 72,670 | 71,929 | ||||||
Treasury stock, at cost (921 shares at April 30, 2008 and January 31, 2008) | (4,808 | ) | (4,805 | ) | ||||
Retained earnings | 4,940 | 662 | ||||||
Accumulated other comprehensive income | 8,176 | 7,875 | ||||||
Total shareholders’ equity | 81,085 | 75,768 | ||||||
Total liabilities and shareholders’ equity | $ | 100,186 | $ | 103,901 | ||||
2
MITCHAM INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
For the Three Months Ended | ||||||||
April 30, | ||||||||
2008 | 2007 | |||||||
Revenues: | ||||||||
Equipment leasing | $ | 12,373 | $ | 10,081 | ||||
Lease pool equipment sales | 561 | 717 | ||||||
Seamap equipment sales | 5,282 | 10,058 | ||||||
Other equipment sales | 318 | 2,158 | ||||||
Total revenues | 18,534 | 23,014 | ||||||
Cost of sales: | ||||||||
Direct costs — equipment leasing | 442 | 470 | ||||||
Direct costs — lease pool depreciation. | 3,640 | 2,404 | ||||||
Cost of equipment sales | 2,824 | 10,036 | ||||||
Total cost of sales | 6,906 | 12,910 | ||||||
Gross profit | 11,628 | 10,104 | ||||||
Operating expenses: | ||||||||
General and administrative | 4,875 | 4,020 | ||||||
Depreciation and amortization | 395 | 355 | ||||||
Total operating expenses | 5,270 | 4,375 | ||||||
Operating income | 6,358 | 5,729 | ||||||
Other income (expense) | ||||||||
Interest, net | 150 | 78 | ||||||
Other, net | 5 | 2 | ||||||
Total other income | 155 | 80 | ||||||
Income before income taxes | 6,513 | 5,809 | ||||||
Provision for income taxes | (2,235 | ) | (1,869 | ) | ||||
Net income | $ | 4,278 | $ | 3,940 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.44 | $ | 0.41 | ||||
Diluted | $ | 0.41 | $ | 0.39 | ||||
Shares used in computing net income per common share: | ||||||||
Basic | 9,751 | 9,640 | ||||||
Diluted | 10,337 | 10,166 |
3
MITCHAM INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
For the Three Months Ended | ||||||||
April 30, | ||||||||
2008 | 2007 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 4,278 | $ | 3,940 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 4,076 | 2,759 | ||||||
Stock-based compensation | 636 | 556 | ||||||
Provision for doubtful accounts | 116 | — | ||||||
Provision for inventory obsolescence | 6 | 50 | ||||||
Gross profit from sale of lease pool equipment | (438 | ) | (490 | ) | ||||
Excess tax benefit from exercise of non-qualified stock options | (53 | ) | (219 | ) | ||||
Deferred tax provision | 548 | 1,309 | ||||||
Non-current income taxes payable | 205 | — | ||||||
Changes in: | ||||||||
Accounts receivable | (2,814 | ) | (4,425 | ) | ||||
Contracts receivable | 424 | (902 | ) | |||||
Inventories | 825 | 581 | ||||||
Income taxes payable | 30 | 237 | ||||||
Accounts payable, accrued expenses, other current liabilities and deferred revenue | (7,310 | ) | 2,378 | |||||
Prepaid expenses and other current assets | 431 | 38 | ||||||
Net cash provided by operating activities | 960 | 5,812 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of seismic equipment held for lease | (11,338 | ) | (15,321 | ) | ||||
Purchases of property and equipment | (269 | ) | (264 | ) | ||||
Sale of used lease pool equipment | 561 | 717 | ||||||
Net cash used in investing activities | (11,046 | ) | (14,868 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from borrowings | 4,000 | 4,500 | ||||||
Payments on borrowings | (637 | ) | (4,500 | ) | ||||
Proceeds from issuance of common stock upon exercise of stock options, net of stock surrendered | 49 | 4 | ||||||
Excess tax benefit from exercise of non-qualified stock options | 53 | 219 | ||||||
Net cash provided by financing activities | 3,465 | 223 | ||||||
Effect of changes in foreign exchange rates on cash and cash equivalents | (330 | ) | 132 | |||||
Net decrease in cash and cash equivalents | (6,951 | ) | (8,701 | ) | ||||
Cash and cash equivalents, beginning of period | 13,884 | 12,582 | ||||||
Cash and cash equivalents, end of period | $ | 6,933 | $ | 3,881 | ||||
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Note A
MITCHAM INDUSTRIES, INC.
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
For the Three Months | ||||||||
Ended | ||||||||
April 30, | ||||||||
2008 | 2007 | |||||||
Net income | $ | 4,278 | $ | 3,940 | ||||
Interest income, net | (150 | ) | (78 | ) | ||||
Depreciation and amortization | 4,076 | 2,759 | ||||||
Provision for income taxes | 2,235 | 1,869 | ||||||
EBITDA | 10,439 | 8,490 | ||||||
Stock-based compensation | 636 | 556 | ||||||
Adjusted EBITDA | $ | 11,075 | $ | 9,046 | ||||
5
MITCHAM INDUSTRIES, INC.
Segment Operating Results
(In thousands)
(Unaudited)
For the Three Months | ||||||||
Ended | ||||||||
April 30, | ||||||||
2008 | 2007 | |||||||
Revenues: | ||||||||
Equipment Leasing | $ | 13,252 | $ | 12,956 | ||||
Seamap | 5,305 | 10,364 | ||||||
Less inter-segment sales | (23 | ) | (306 | ) | ||||
Total revenues | 18,534 | 23,014 | ||||||
Cost of Sales: | ||||||||
Equipment Leasing | 4,488 | 4,845 | ||||||
Seamap | 2,469 | 8,235 | ||||||
Less inter-segment costs | (51 | ) | (170 | ) | ||||
Total cost of sales | 6,906 | 12,910 | ||||||
Gross Profit: | ||||||||
Equipment Leasing | $ | 8,764 | $ | 8,111 | ||||
Seamap | 2,836 | 2,129 | ||||||
Less inter-segment amounts | 28 | (136 | ) | |||||
Total gross profit | 11,628 | 10,104 |
# # #
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