Mitcham Industries Reports Fiscal 2021 First Quarter Results

Contacts:

Rob Capps, Co-CEO

Mitcham Industries, Inc.

936-291-2277

Ken Dennard / Zach Vaughan

Dennard Lascar Investor Relations

713-529-6600

[email protected] 

MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

April 30, 2020

January 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$

4,705

$

3,090

Restricted cash

—

144

Accounts receivable, net of allowance for doubtful accounts of $2,196 and $4,054 at April 30, 2020 and January 31, 2020, respectively

7,996

11,921

Inventories, net

13,783

13,261

Prepaid expenses and other current assets

2,515

2,211

Total current assets

28,999

30,627

Seismic equipment lease pool and property and equipment, net

12,002

13,777

Operating lease right-of-use assets

1,957

2,300

Intangible assets, net

7,703

8,161

Goodwill

—

2,531

Long-term receivables, net of allowance for doubtful accounts of $- and $- at April 30, 2020 and January 31, 2020, respectively

535

403

Other assets

7

429

Total assets

$

51,203

$

58,228

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

3,292

$

2,650

Deferred revenue

602

765

Accrued expenses and other current liabilities

3,071

3,452

Income taxes payable

620

242

Operating lease liabilities - current

966

1,339

Total current liabilities

8,551

8,448

Operating lease liabilities - non-current

991

961

Other non-current liabilities

911

967

Deferred tax liability

200

200

Total liabilities

10,653

10,576

Shareholders' equity:

Preferred stock, $1.00 par value; 1,000 shares authorized; 994 and 994 shares issued and outstanding at April 30, 2020 and January 31, 2020, respectively

22,104

22,104

Common stock, $0.01 par value; 20,000 shares authorized; 14,097 and 14,097 shares issued at April 30, 2020, and January 31, 2020, respectively

141

141

Additional paid-in capital

124,194

123,964

Treasury stock, at cost (1,929 shares at April 30, 2020 and January 31, 2020)

(16,860)

(16,860)

Accumulated deficit

(84,511)

(77,310)

Accumulated other comprehensive loss

(4,518)

(4,387)

Total shareholders' equity

40,550

47,652

Total liabilities and shareholders' equity

$

51,203

$

58,228

MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

For the Three Months Ended
April 30,

2020

2019

Revenues:

Sale of marine technology products

$

3,187

$

5,977

Equipment leasing

2,575

3,323

Sale of lease pool and other equipment

1,613

557

Total revenues

7,375

9,857

Cost of sales:

Sale of marine technology products

2,703

3,455

Equipment leasing (including lease pool depreciation)

1,770

2,411

Equipment sales

713

250

Total cost of sales

5,186

6,116

Gross profit

2,189

3,741

Operating expenses:

Selling, general and administrative

4,654

5,232

Research and development

410

315

Impairment of intangible assets

2,531

—

Depreciation and amortization

774

650

Total operating expenses

8,369

6,197

Operating loss

(6,180)

(2,456)

Other income (expense):

Interest expense, net

(11)

(11)

Other, net

70

107

Total other income

59

96

Loss before income taxes

(6,121)

(2,360)

Provision for income taxes

(521)

(55)

Net loss

$

(6,642)

$

(2,415)

Preferred stock dividends

(559)

(471)

Net loss attributable to common shareholders

$

(7,201)

$

(2,886)

Net loss per common share:

Basic

$

(0.59)

$

(0.24)

Diluted

$

(0.59)

$

(0.24)

Shares used in computing loss per common share:

Basic

12,172

12,119

Diluted

12,172

12,119

MITCHAM INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

For the Three Months Ended
April 30,

2020

2019

Cash flows from operating activities:

Net loss

$

(6,642)

$

(2,415)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

1,701

2,131

Stock-based compensation

230

172

Impairment of intangible assets

2,531

—

Provision for inventory obsolescence

22

—

Gross profit from sale of lease pool equipment

(850)

(363)

Deferred tax expense

—

135

Changes in:

Accounts receivable

3,728

76

Unbilled revenue

(9)

5

Inventories

(554)

(501)

Prepaid expenses and other current assets

201

(672)

Income taxes receivable and payable

424

2

Accounts payable, accrued expenses and other current liabilities

300

(382)

Deferred revenue

(153)

(23)

Foreign exchange losses net of gains

—

(16)

Net cash provided by (used in) operating activities

929

(1,851)

Cash flows from investing activities:

Purchases of seismic equipment held for lease

(110)

—

Purchases of property and equipment

(65)

(366)

Sales of used lease pool equipment

1,414

730

Sale of business, net of cash sold

—

239

Net cash provided by investing activities

1,239

603

Cash flows from financing activities:

Net proceeds from preferred stock offering

—

409

Preferred stock dividends

(559)

(471)

Net cash used in financing activities

(559)

(62)

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

(138)

(100)

Net decrease in cash, cash equivalents and restricted cash

1,471

(1,410)

Cash, cash equivalents and restricted cash, beginning of period

3,234

9,549

Cash, cash equivalents and restricted cash, end of period

$

4,705

$

8,139

MITCHAM INDUSTRIES, INC.

Reconciliation of Net Loss and Net Cash Provided by Operating Activities to EBITDA and

Adjusted EBITDA

(in thousands)

(unaudited)

For the Three Months Ended
April 30,

2020

2019

Reconciliation of Net loss to EBITDA and Adjusted EBITDA

Net loss

$

(6,642)

$

(2,415)

Interest expense (income), net

11

11

Depreciation and amortization

1,701

2,131

Provision (benefit) for income taxes

521

55

EBITDA (1)

(4,409)

(218)

Non-cash foreign exchange losses

109

52

Stock-based compensation

230

172

Impairment of intangible assets

2,531

—

Cost of lease pool sales

587

55

Adjusted EBITDA (1)

$

(952)

$

61

Reconciliation of Net Cash Provided by Operating Activities to EBITDA

Net cash provided by (used in) operating activities

$

929

$

(1,851)

Stock-based compensation

(230)

(172)

Provision for inventory obsolescence

(22)

—

Changes in accounts receivable (current and long-term)

(3,719)

(76)

Interest paid

11

14

Taxes paid, net of refunds

149

97

Gross profit from sale of lease pool equipment

850

363

Changes in inventory

554

501

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

(147)

405

Impairment of intangible assets

(2,531)

—

Changes in prepaid expenses and other current assets

(201)

672

Foreign exchange (losses) gains, net

—

16

Other

(52)

(187)

EBITDA (1)

$

(4,409)

$

(218)

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, impairment of intangible assets, 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
April 30,

2020

2019

Revenues:

Marine technology products

$

3,212

$

5,982

Equipment leasing

4,188

3,935

Inter-segment sales

(25)

(60)

Total revenues

7,375

9,857

Cost of sales:

Marine technology products

2,728

3,515

Equipment leasing

2,483

2,661

Inter-segment costs

(25)

(60)

Total cost of sales

5,186

6,116

Gross profit

2,189

3,741

Operating expenses:

Selling, general and administrative

4,654

5,232

Research and development

410

315

Impairment of intangible assets

2,531

—

Depreciation and amortization

774

650

Total operating expenses

8,369

6,197

Operating loss

$

(6,180)

$

(2,456)

Marine Technology Products Segment:

Revenues:

Seamap

$

2,213

$

4,324

Klein

1,241

1,561

SAP

—

101

Intra-segment sales

(242)

(4)

3,212

5,982

Cost of sales:

Seamap

1,894

2,323

Klein

1,076

1,101

SAP

—

95

Intra-segment sales

(242)

(4)

2,728

3,515

Gross profit

$

484

$

2,467

Gross profit margin

15

%

41

%

Equipment Leasing Segment:

Revenue:

Equipment leasing

$

2,576

$

3,378

Lease pool equipment sales

1,436

419

Other equipment sales

176

138

4,188

3,935

Cost of sales:

Direct costs-equipment leasing

844

965

Lease pool depreciation

926

1,446

Cost of lease pool equipment sales

587

56

Cost of other equipment sales

126

194

2,483

2,661

Gross profit

$

1,705

$

1,274