Mitcham Industries Reports Fiscal 2011 First Quarter Results

HUNTSVILLE, Texas, June 8 /PRNewswire-FirstCall/ -- Mitcham Industries, Inc. (Nasdaq: MIND) (the "Company") today announced financial results for its fiscal 2011 first quarter ended April 30, 2010.  

Total revenues for the first quarter of fiscal 2011 were $16.5 million compared to $10.6 million in the first quarter of fiscal 2010.  Net income for the first quarter of fiscal 2011 was $2.4 million, or $0.24 per diluted share, compared to net loss of $80,000, or $0.01 loss per share, for the first quarter of fiscal 2010.  Fiscal 2011 first quarter results include a gain of $1.3 million, or $0.13 per diluted share, related to the acquisition of Absolute Equipment Solutions ("AES"). Excluding this gain, net income for the quarter was $1.1 million, or $0.11 per diluted share.

Bill Mitcham, the Company's President and CEO, stated, "We are pleased to report a solid first quarter as our equipment leasing segment experienced a substantial improvement in our international markets while our Seamap segment posted another strong quarter.  Our equipment leasing revenues for the first quarter rose 51% from a year ago and 27% from the fourth quarter, and Seamap revenues more than doubled from a year ago.

"Our leasing business showed marked improvement from the downturn we experienced last year.  Contributing to this was a strong winter season in the Russian market.  Of course, most of the Russian contracts ended during the quarter as the winter season came to a close, but we do have prospects for some summer work in that region.  Leasing activity in Southeast Asia and South America continued to be robust.  Our Seamap segment continued to perform well as we delivered two GunLink 4000 systems during the first quarter, as well as other equipment. We also generated a significant amount of ongoing service and repair work during the quarter.

"Considerable uncertainty remains in the oil and gas industry; however, there are positive developments that we believe could benefit our business for the balance of fiscal 2011 and beyond.  We are seeing improvement in bid activity worldwide, with increased activity in Eastern Europe and promising prospects in areas such as Indonesia and South America.  There continues to be widespread interest in our three-component digital sensor units, and we continue to build our downhole seismic tool business.   Interest in our GunLink and BuoyLink products continues to be high, and we are optimistic about the prospects for our Seamap segment.

"We are pleased with our recent acquisition of AES, which is meeting our original expectations.  Overall, we believe we are well positioned, operationally and financially, to capitalize on improving conditions in the industry."

FIRST QUARTER FISCAL 2011 RESULTS

Total revenues for the fiscal 2011 first quarter increased 56% from the first quarter a year ago to $16.5 million, primarily due to a significant increase in leasing revenues and improved sales at Seamap.   A significant portion of the Company's revenues are generated from sources outside the United States.  Revenues from international customers were approximately 89% of revenues in the first quarter of fiscal 2011 compared to approximately 79% of revenues during the first quarter of fiscal 2010.  

Core revenues from equipment leasing, excluding equipment sales, rose 51% to $9.6 million compared to $6.3 million in the same period a year ago.  Contributing to this improvement was a strong rebound in the Company's Russian business this winter and solid growth in Indonesia and South America.  Core revenues from equipment leasing rose 27% from the previous quarter due in large part to the increase in Russia.  

Sales of lease pool equipment were $0.4 million compared to $69,000 in the first quarter of fiscal 2010.  Sales of new seismic, hydrographic and oceanographic equipment were $0.8 million compared to $1.6 million in the comparable period a year ago.  

Seamap equipment sales more than doubled to $5.8 million from $2.6 million in the comparable period a year ago, primarily due to the delivery of two GunLink 4000 systems, various other equipment and a considerable amount of ongoing service and repair work in the quarter.

Lease pool depreciation in the first quarter was $4.9 million versus $4.1 million in same period last year, a 20% increase.  This increase resulted from additions made to the Company's lease pool during fiscal 2010, including downhole seismic tools, three component digital sensors and a variety of marine equipment.

Gross profit in the fiscal 2011 first quarter was $6.9 million compared to $3.8 million in the first quarter of fiscal 2010.  Gross profit margin for the first quarter of fiscal 2011 was 42% compared to 36% in the same period a year ago.

General and administrative ("G&A") costs for the first quarter of fiscal 2011 were $4.2 million compared to $3.5 million in the first quarter of fiscal 2010 principally due to lower overhead absorption from long-term contracts and higher incentive compensation expense.  Operating income for the first quarter of fiscal 2011 was $2.5 million compared to $16,000 in the comparable period a year ago.  Net income for the first quarter of fiscal 2011 was $2.4 million, or $0.24 per diluted share, compared to net loss of $80,000, or $0.01 loss per share, for the first quarter of fiscal 2010.  

Fiscal 2011 first quarter results include a gain of $1.3 million, or $0.13 per diluted share, related to the acquisition of AES.  According to accounting standards, a valuation of the acquired assets and liabilities is required as of the closing of an acquisition.  If the fair value, as defined in the accounting standards, of the acquired assets and liabilities exceeds the purchase price, a negative goodwill or bargain purchase situation exists, resulting in a gain being recognized as of the date of the acquisition.

EBITDA (earnings before interest, taxes, depreciation and amortization and excluding the gain from the AES acquisition) for the first quarter increased 61% to $7.3 million, or 44% of total revenues, from $4.5 million, or 43% 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, the most comparable GAAP measure, in Note A under the accompanying financial tables.

CONFERENCE CALL

The Company has scheduled a conference call for Wednesday, June 9, 2010 at 9:00 a.m. Eastern time to discuss its fiscal 2011 first quarter end results.  To access the call, please dial (480) 6299725 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 16, 2010 and may be accessed by calling (303) 5903030, and using the passcode 4305330#.  A web cast 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 DRG&E at (713) 5296600 or email [email protected].

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; Lima, Peru; Bogota, Colombia 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. While management believes that these forward-looking statements are reasonable when and as made, actual results may differ materially from such forward-looking statements. Important factors that could cause or contribute to such differences include possible decline in demand for seismic data and our services; the effect of  fluctuations in oil and natural gas prices on exploration activity; the effect of uncertainty in financial markets on our customers' and our ability to obtain financing; loss of significant customers; seasonal fluctuations that can adversely affect our business; defaults by customers on amounts due us; possible impairment of long-lived assets; risks associated with our manufacturing  operations; inability to obtain funding or to obtain funding under acceptable terms; intellectual property claims by third parties; risks associated with our foreign operation, including foreign currency exchange risk; and other factors that are disclosed in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available from the Company without charge. Readers are cautioned to not place undue reliance on forward-looking statements which speak only 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 -

Note A

SOURCE Mitcham Industries, Inc.