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Mitcham Industries Reports Fiscal 2018 Fourth Quarter And Full Year Results
[April 10, 2018]

Mitcham Industries Reports Fiscal 2018 Fourth Quarter And Full Year Results


HUNTSVILLE, Texas, April 10, 2018 /PRNewswire/ -- Mitcham Industries, Inc. (NASDAQ: MIND) ("Mitcham" or "the Company") today announced financial results for its fiscal 2018 fourth quarter and full year ended January 31, 2018.

Total revenues for the fourth quarter of fiscal 2018 were $10.4 million compared to $12.5 million in the fourth quarter of fiscal 2017.  Revenues from the Marine Technology Products segment fell to $5.0 million in the fourth quarter, compared to $6.9 million in the same period last year.  Revenues from the Equipment Leasing segment were $5.4 million in the fourth quarter compared to $5.7 million in the same period last year.

The Company reported a net loss attributable to common shareholders of $8.0 million, or $(0.66) per share, in the fourth quarter of fiscal 2018 compared to a net loss of $10.0 million, or $(0.83) per share, in the fourth quarter of fiscal 2017.  The fourth quarter results included approximately $3.5 million of pre-tax charges, or $0.29 per share, related to impairment of goodwill, a provision for doubtful accounts, inventory adjustments and other restructuring costs. Excluding the impact of these charges, the Company reported a net loss of approximately $4.5 million, or $(0.37) per share in the fourth quarter of 2018.

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, impairment of intangibles, stock-based compensation, non-cash costs of lease pool equipment sales and non-cash foreign exchange gains and losses) for the fourth quarter of fiscal 2018 was a loss of approximately $1.2 million compared to a gain of approximately $2.6 million in the same period last year. Adjusted EBITDA, which is not a measure determined in accordance with United States generally accepted accounting principles ("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, "While our financial results were not what we would like them to be, we believe during fiscal 2018 and early fiscal 2019 we have made significant progress in re-positioning Mitcham as a significant provider of marine technology products. You will note that we have revised the name of our Equipment Manufacturing and Sales segment to the Marine Technology Products segment.  We think this more accurately reflects the operations and focus of that part of our business.

"During fiscal 2018 and early 2019, we continued to expand the scale of our product offerings and increase Mitcham's footprint in the marine technology sector. In addition to these efforts, we have significantly lessened our exposure to the cyclicality of oil and gas exploration by reducing our lease pool of seismic equipment to reflect the changed business environment for our equipment leasing segment. We believe these actions have helped us to emerge from this recent downturn with solid liquidity and a clean balance sheet. Going forward, we believe that Mitcham is well positioned to benefit from increased activity in the marine technology market.  

"Overall, our financial results for the fourth fiscal quarter of 2018 improved over the fourth quarter of last fiscal year, despite the non-recurring charges discussed above. This improvement was due primarily to lower lease pool depreciation and higher gross profits on sales of lease pool equipment.  Although sales of marine technology products were lower than expected during the fourth quarter and all of fiscal 2018, based on recent bookings and inquiry activity, we anticipate a stronger year for marine technology products sales in fiscal 2019.  Our more optimistic outlook for this part of our business is driven in part by the anticipated impact of newly added products.  As recently announced, we have added a new line of marine sensor and towed streamer products that are based on intellectual property we acquired in February.  We expect to begin delivering these products and services later this fiscal year, including services to Mitsubishi Heavy Industries Ltd. under the support agreement we entered into in conjunction with the acquisition of the technology.

"Mitcham's capital structure remains solid with no debt on our balance sheet and ample liquidity, with cash and cash equivalents of $9.9 million as of January 31, 2018. In addition, we generated positive cash flow from operating activities over the course of fiscal 2018."

FISCAL 2018 FOURTH QUARTER RESULTS

Total revenues for the fourth quarter of fiscal 2018 decreased 17%, driven mainly by a decrease in marine technology products sales compared to last year's fourth quarter. Marine technology products sales decreased 27% year-over-year, while equipment leasing revenues, excluding lease pool equipment sales, decreased 12% from the fourth quarter of fiscal 2017.  Total revenues for the fourth quarter of fiscal 2018 decreased to $10.4 million compared to $12.5 million in the same period last year.

Marine technology products sales decreased to $5.0 million in the fourth quarter of fiscal 2018 compared to $6.9 million in last year's fourth quarter.  The fourth quarter sales consisted of approximately $2.5 million of Seamap, $1.1 million from Klein (including $0.3 million of intra-segment sales) and $1.7 million by SAP.   

Equipment leasing revenues for the fourth quarter of fiscal 2018, excluding lease pool equipment sales, were $2.1 million compared to $2.3 million in the same period last year.  The year-over-year decrease in fourth quarter equipment leasing revenues was primarily driven by a reduction in exploration activity and an excess supply of equipment.

Lease pool and other equipment sales were $3.3 million in the fourth quarter of fiscal 2018, compared to $3.4 million in the fourth quarter a year ago. 

Lease pool depreciation expense in the fourth quarter of fiscal 2018 decreased to $2.9 million from $5.8 million in the same period a year ago, due to the reduction in the lease pool as a result of lower lease pool purchases and increased lease pool sales.   

General and administrative expenses increased to $5.2 million in the fourth quarter of fiscal 2018 versus $4.6 million in the fourth quarter of fiscal 2017, due primarily to restructuring costs accrued in the period.

FISCAL 2018 RESULTS

Total revenues for fiscal 2018 increased 18% to $48.3 million compared to $41.0 million in fiscal 2017.  Revenues for Marine Technology Products in fiscal 2018 were $27.4 million compared to $25.1 million in fiscal 2017.  Equipment leasing revenues, excluding lease pool equipment sales, were $7.8 million in fiscal 2018 compared to $10.2 million a year ago.  Lease pool and other equipment sales in fiscal 2018 were $13.0 million versus $5.8 million in fiscal 2017. 

General and administrative expense slightly decreased to $19.7 million in fiscal 2018 from $19.8 million in fiscal 2017.  The net loss available to common shareholders for fiscal 2018 was $22.0 million, or $(1.82) per share, compared to net a loss of $33.6 million, or $(2.79) per share in fiscal 2017.  Adjusted EBITDA in fiscal 2018 doubled to $7.2 million compared to $3.6 million in fiscal 2017. 

CONFERENCE CALL

We have scheduled a conference call for Wednesday, April 11 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) to discuss our fiscal 2018 fourth quarter and full year 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 April 25, 2018 and may be accessed by calling (201) 612-7415 and using passcode 13678058#. 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, Russia, 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 January 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.

Tables to Follow

 



MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)



January 31,


2018


2017

ASSETS

Current assets:




Cash and cash equivalents

$

9,902



$

2,902


Restricted cash

244



609


Accounts and contracts receivable, net of allowance for doubtful accounts of $3,885 and $3,716 at January 31, 2018 and January 31, 2017, respectively

10,494



15,830


Inventories, net

10,856



11,960


Prepaid income taxes



1,565


Prepaid expenses and other current assets

1,550



2,193


Total current assets

33,046



35,059


Seismic equipment lease pool and property and equipment, net

22,900



43,838


Intangible assets, net

8,015



9,012


Goodwill

2,531



3,997


Non-current prepaid income taxes

1,609




Long-term receivables, net of allowance for doubtful accounts of $2,282 and $2,188 at January 31, 2018 and January 31, 2017, respectively

4,652



2,780


Other assets

926



28


Total assets

$

73,679



$

94,714


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:




Accounts payable

$

1,271



$

1,929


Current maturities – long-term debt



6,371


Deferred revenue

741



651


Accrued expenses and other current liabilities

5,253



4,514


Income taxes payable

258




Total current liabilities

7,523



13,465


Deferred tax liability

307



317


Total liabilities

7,830



13,782


Shareholders' equity:




Preferred stock, $1.00 par value; 1,000 shares authorized; 532 and 343 issued and outstanding at January 31, 2018 and January 31, 2017, respectively

11,544



7,294


Common stock $.01 par value; 20,000 shares authorized; 14,019 shares issued at January 31, 2018 and January 31, 2017

140



140


     Additional paid-in capital

122,304



121,401


     Treasury stock, at cost (1,929 at January 31, 2018 and 2017)

(16,860)



(16,858)


     Accumulated deficit

(42,425)



(20,451)


     Accumulated other comprehensive loss

(8,854)



(10,594)


          Total shareholders' equity

65,849



80,932


             Total liabilities and shareholders' equity

$

73,679



$

94,714



 

MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (in thousands, except per share data)

(unaudited)




For the Three Months Ended January 31,


For the Twelve Months Ended January 31,



2018


2017


2018


2017

Revenues:









Sale of marine technology products


$

4,991



$

6,865



$

27,420



$

25,058


Equipment leasing


2,061



2,342



7,826



10,161


Sale of lease pool equipment


3,311



3,341



13,030



5,780


Total revenues


10,363



12,548



48,276



40,999


Cost of sales:









Sale of marine technology products


3,711



3,509



16,686



13,571


Equipment leasing (including lease pool depreciation)


3,949



6,785



17,764



29,037


Lease pool equipment sales


1,332



4,923



7,742



5,805


Total cost of sales


8,992



15,217



42,192



48,413


Gross profit (loss)


1,371



(2,669)



6,084



(7,414)


Operating expenses:









Selling, general and administrative


5,155



4,593



19,663



19,753


Research and development


865



356



1,502



974


Provision for doubtful accounts


1,013



750



1,013



750


Impairment of intangible assets


1,466





1,466




Depreciation and amortization


526



542



2,148



2,399


Total operating expenses


9,025



6,241



25,792



23,876


Operating loss


(7,654)



(8,910)



(19,708)



(31,290)


Other income (expense):









Interest income (expense)


24



(104)



47



(643)


Other, net


(391)



468



(498)



594


Total other (expense) income


(367)



364



(451)



(49)


Loss before income taxes


(8,021)



(8,546)



(20,159)



(31,339)


Benefit from (provision for) income taxes


262



(1,308)



(910)



(1,814)


Net loss


$

(7,759)



$

(9,854)



$

(21,069)



$

(33,153)


Preferred stock dividends


(275)



(192)



(905)



(486)


Net loss attributable to common shareholders


$

(8,034)



$

(10,046)



$

(21,974)



$

(33,639)


Net loss per common share:









Basic


$

(0.66)



$

(0.83)



$

(1.82)



$

(2.79)


Diluted


$

(0.66)



$

(0.83)



$

(1.82)



$

(2.79)


Shares used in computing loss per common share:









Basic


12,087



12,077



12,084



12,070


Diluted


12,087



12,077



12,084



12,070


 

MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)




For the Twelve Months Ended January 31,



2018


2017

Cash flows from operating activities:





Net loss


$

(21,069)



$

(33,153)


Adjustments to reconcile net loss to net cash provided by operating activities:





Depreciation and amortization


16,637



28,275


Stock-based compensation


903



737


Impairment


1,466




Provision for doubtful accounts, net of charge offs


1,013



750


Provision for inventory obsolescence


815



75


Gross (profit) loss from sale of lease pool equipment


(4,906)



298


Deferred tax expense


(20)



934


Non-Current prepaid tax


182




Changes in:





Trade accounts and contracts receivable


4,405



7,345


Inventories


685



850


Income taxes receivable and payable




475


Accounts payable, accrued expenses and other current liabilities


(455)



(2,189)


Prepaid and other current assets, net


1,002



(1,327)


Foreign exchange losses net of gains


61



84


Net cash provided by operating activities


719



3,154


Cash flows from investing activities:





Purchases of seismic equipment held for lease


(909)



(636)


Purchases of property and equipment


(407)



(283)


Sales of used lease pool equipment


10,313



5,331


Net cash provided by investing activities


8,997



4,412


Cash flows from financing activities:





Net payments on revolving line of credit


(3,500)



(10,900)


Payments on term loan and other borrowings


(2,807)



(3,217)


Net proceeds from preferred stock offering


4,174



7,294


Preferred stock dividends


(905)



(486)


Purchase of treasury stock




(4)


Net cash used in financing activities


(3,038)



(7,313)


Effect of changes in foreign exchange rates on cash and cash equivalents and restricted cash


(43)



(511)


Net increase (decrease) in cash and cash equivalents and restricted cash


6,635



(258)


Cash and cash equivalents and restricted cash, beginning of year


3,511



3,769


Cash and cash equivalents and restricted cash, end of year


$

10,146



$

3,511


 

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 January 31,


For the Twelve Months Ended January 31,



2018


2017


2018


2017



(in thousands)


(in thousands)

Reconciliation of Net loss to EBITDA and Adjusted EBITDA









Net loss


$

(7,759)



$

(9,854)



$

(21,069)



$

(33,153)


Interest (income) expense, net


(24)



104



(47)



643


Depreciation and amortization


3,418



6,348



16,637



28,275


Benefit from (provision for) income taxes


(262)



1,308



910



1,814


EBITDA (1)


(4,627)



(2,094)



(3,569)



(2,421)


Non-cash foreign exchange losses (gains)


524



(369)



844



(338)


Stock-based compensation


218



150



903



737


Impairment of  intangible  assets


1,466



-



1,466



-


Cost of lease pool sales


1,263



4,865



7,571



5,629


Adjusted EBITDA (1)


$

(1,156)



$

2,552



$

7,215



$

3,607


Reconciliation of Net cash provided by operating activities to EBITDA









Net cash (used in) provided by operating activities


$

(1,455)



$

(533)



$

719



$

3,154


Stock-based compensation


(218)



(150)



(903)



(737)


Provision for doubtful accounts


(1,013)



(750)



(1,013)



(750)


Provision for inventory obsolescence


(757)



(10)



(815)



(75)


Changes in trade accounts, contracts and notes receivable


724



2,963



(4,405)



(7,345)


Interest received


2



63



86



673


Taxes paid, net of refunds


58



(296)



494



409


Gross profit (loss) from sale of lease pool equipment


1,826



(1,122)



4,906



298


Changes in inventory


(606)



(379)



(685)



(850)


Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue


(789)



(2,053)



455



2,189


Impairment of intangible assets


(1,466)



-



(1,466)



-


Changes in prepaid expenses and other current assets


(795)



436



(1,002)



1,329


Foreign exchange losses (gains), net


(313)



297



(61)



(84)


Other


175



(560)



121



(632)


EBITDA (1)


$

(4,627)



$

(2,094)



$

(3,569)



$

(2,421)



(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, certain non-recurring contract settlement costs, impairment of intangible assets 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 accounting principles generally accepted in the United States of America ("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 January 31,


For the Twelve Months Ended January 31,



2018


2017


2018


2017



(in thousands)


(in thousands)

Revenues:









Marine technology products


$

5,008



$

6,871



$

27,573



$

25,100


Equipment leasing


5,373



5,739



20,919



15,961


Inter-segment sales


(18)



(62)



(216)



(62)


Total revenues


10,363



12,548



48,276



40,999


Cost of sales:









Marine technology products


3,728



3,551



16,844



13,612


Equipment leasing


5,282



11,729



25,563



34,863


Inter-segment costs


(18)



(63)



(215)



(62)


Total cost of sales


8,992



15,217



42,192



48,413


Gross profit (loss)


1,371



(2,669)



6,084



(7,414)


Operating expenses:









Selling, general and administrative


5,155



4,593



19,663



19,753


Research and development


865



356



1,502



974


Provision for doubtful accounts


1,013



750



1,013



750


Impairment of intangible assets


1,466





1,466




Depreciation and amortization


526



542



2,148



2,399


Total operating expenses


9,025



6,241



25,792



23,876


Operating loss


$

(7,654)



$

(8,910)



$

(19,708)



$

(31,290)


Marine Technology Products Segment:









Revenues:









Seamap


$

2,474



$

4,423



$

18,527



$

14,085


Klein


1,146



1,745



4,602



8,207


SAP


1,669



1,533



5,667



4,786


Intra-segment sales


(281)



(830)



(1,223)



(1,978)




5,008



6,871



27,573



25,100


Cost of sales:









Seamap


1,580



1,605



10,018



6,106


Klein


1,061



1,377



3,632



5,707


SAP


1,355



1,232



4,513



3,668


Intra-segment sales


(268)



(663)



(1,319)



(1,869)




3,728



3,551



16,844



13,612


Gross profit


$

1,280



$

3,320



$

10,729



$

11,488


Gross profit margin


26

%


48

%


39

%


46

%

Equipment Leasing Segment:









Revenue:



Equipment leasing


$

2,060



$

2,342



$

7,826



$

10,161


Lease pool equipment sales


3,089



3,075



12,478



5,332


Other equipment sales


224



322



615



468




5,373



5,739



20,919



15,961


Cost of sales:



Direct costs-equipment leasing


1,088



1,008



3,450



3,284


Lease pool depreciation


2,861



5,777



14,370



25,753


Cost of lease pool equipment sales


1,263



4,865



7,571



5,629


Cost of other equipment sales


70



79



172



197




5,282



11,729



25,563



34,863


Gross profit (loss)


$

91



$

(5,990)



$

(4,644)



$

(18,902)


 

 Contacts: 

Rob Capps, Co-CEO


Mitcham Industries, Inc.


936-291-2277




Jack Lascar / Mark Roberson


Dennard Lascar Investor Relations


713-529-6600

 

Cision View original content:http://www.prnewswire.com/news-releases/mitcham-industries-reports-fiscal-2018-fourth-quarter-and-full-year-results-300627627.html

SOURCE Mitcham Industries, Inc.


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