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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 5th 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
October 31,


For the Nine Months Ended
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
October 31,


For the Nine Months Ended
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

October 31,


For the Nine Months Ended

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)


 

Cision

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SOURCE Mitcham Industries, Inc.