Date of Report (Date of Earliest Event Reported): | June 6, 2018 |
Texas | 001-13490 | 76-0210849 |
_____________________ (State or other jurisdiction | _____________ (Commission | ______________ (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
8141 SH 75 South, P.O. Box 1175, Huntsville, Texas | 77342 | |
________________________________ (Address of principal executive offices) | ___________ (Zip Code) |
Registrant’s telephone number, including area code: | 936-291-2277 |
Mitcham Industries, Inc. | ||||
June 6, 2018 | By: | /s/ Robert P. Capps | ||
Name: Robert P. Capps | ||||
Title: Co-Chief Executive Officer, Executive Vice President-Finance and Chief Financial Officer |
Contacts: | Rob Capps, Co-CEO Mitcham Industries, Inc. 936-291-2277 | |
Jack Lascar / Mark Roberson Dennard Lascar Associates Investor Relations 713-529-6600 |
April 30, 2018 | January 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 8,613 | $ | 9,902 | |||
Restricted cash | 233 | 244 | |||||
Accounts and contracts receivable, net of allowance for doubtful accounts of $3,560 and $3,885 at April 30, 2018 and January 31, 2018, respectively | 12,333 | 10,494 | |||||
Inventories, net | 11,432 | 10,856 | |||||
Prepaid expenses and other current assets | 2,132 | 1,550 | |||||
Total current assets | 34,743 | 33,046 | |||||
Seismic equipment lease pool and property and equipment, net | 21,046 | 22,900 | |||||
Intangible assets, net | 11,484 | 8,015 | |||||
Goodwill | 2,531 | 2,531 | |||||
Non-current prepaid income taxes | 1,603 | 1,609 | |||||
Long-term receivables, net of allowance for doubtful accounts of $94 and $2,282 at April 30, 2018 and January 31, 2018, respectively | 706 | 4,652 | |||||
Other assets | 611 | 926 | |||||
Total assets | $ | 72,724 | $ | 73,679 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,889 | $ | 1,271 | |||
Deferred revenue | 723 | 741 | |||||
Accrued expenses and other current liabilities | 4,895 | 5,253 | |||||
Income taxes payable | 896 | 258 | |||||
Total current liabilities | 9,403 | 7,523 | |||||
Deferred tax liability | 105 | 307 | |||||
Total liabilities | 9,508 | 7,830 | |||||
Shareholders’ equity: | |||||||
Preferred stock, $1.00 par value; 1,000 shares authorized; 698 and 532 issued and outstanding at April 30, 2018, and January 31, 2018, respectively | 15,312 | 11,544 | |||||
Common stock $.01 par value; 20,000 shares authorized; 14,019 shares issued at April 30, 2018 and January 31, 2018 | 140 | 140 | |||||
Additional paid-in capital | 122,430 | 122,304 | |||||
Treasury stock, at cost (1,929 at April 30, 2018 and January 31, 2018) | (16,860 | ) | (16,860 | ) | |||
Accumulated deficit | (48,715 | ) | (42,425 | ) | |||
Accumulated other comprehensive loss | (9,091 | ) | (8,854 | ) | |||
Total shareholders’ equity | 63,216 | 65,849 | |||||
Total liabilities and shareholders’ equity | $ | 72,724 | $ | 73,679 |
For the Three Months Ended April 30, | ||||||||
2018 | 2017 | |||||||
Revenues: | ||||||||
Sale of marine technology products | $ | 3,566 | $ | 6,888 | ||||
Equipment leasing | 2,697 | 2,717 | ||||||
Sale of lease pool equipment | 1,350 | 8,828 | ||||||
Total revenues | 7,613 | 18,433 | ||||||
Cost of sales: | ||||||||
Sale of marine technology products | 2,086 | 3,975 | ||||||
Equipment leasing (including lease pool depreciation) | 3,582 | 5,125 | ||||||
Lease pool equipment sales | 700 | 6,139 | ||||||
Total cost of sales | 6,368 | 15,239 | ||||||
Gross profit | 1,245 | 3,194 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 5,630 | 4,804 | ||||||
Research and development | 370 | 98 | ||||||
Provision for doubtful accounts | 200 | — | ||||||
Depreciation and amortization | 617 | 581 | ||||||
Total operating expenses | 6,817 | 5,483 | ||||||
Operating loss | (5,572 | ) | (2,289 | ) | ||||
Other income (expense): | ||||||||
Interest, net | 18 | (46 | ) | |||||
Other, net | 86 | (101 | ) | |||||
Total other income (expense) | 104 | (147 | ) | |||||
Loss before income taxes | (5,468 | ) | (2,436 | ) | ||||
Provision for income taxes | (437 | ) | (229 | ) | ||||
Net loss | $ | (5,905 | ) | $ | (2,665 | ) | ||
Preferred stock dividends | (385 | ) | (194 | ) | ||||
Net loss attributable to common shareholders | $ | (6,290 | ) | $ | (2,859 | ) | ||
Net loss per common share: | ||||||||
Basic | $ | (0.52 | ) | $ | (0.24 | ) | ||
Diluted | $ | (0.52 | ) | $ | (0.24 | ) | ||
Shares used in computing loss per common share: | ||||||||
Basic | 12,087 | 12,078 | ||||||
Diluted | 12,087 | 12,078 |
For the Three Months Ended April 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (5,905 | ) | $ | (2,665 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 3,303 | 4,791 | ||||||
Stock-based compensation | 126 | 224 | ||||||
Provision for doubtful accounts, net of charge offs | (200 | ) | — | |||||
Provision for inventory obsolescence | — | 8 | ||||||
Gross profit from sale of lease pool equipment | (536 | ) | (2,689 | ) | ||||
Deferred tax benefit | (202 | ) | (27 | ) | ||||
Changes in working capital items: | ||||||||
Trade accounts and contracts receivable | 2,418 | 2,175 | ||||||
Unbilled revenue | (930 | ) | — | |||||
Inventories | (844 | ) | (1,403 | ) | ||||
Prepaid expenses and other current assets | (1,520 | ) | 549 | |||||
Income taxes payable | 642 | 149 | ||||||
Accounts payable, accrued expenses and other current liabilities | (47 | ) | 48 | |||||
Deferred revenue | 313 | — | ||||||
Foreign exchange losses net of gains | 16 | (48 | ) | |||||
Net cash (used in) provided by operating activities | (3,366 | ) | 1,112 | |||||
Cash flows from investing activities: | ||||||||
Purchases of seismic equipment held for lease | (190 | ) | (158 | ) | ||||
Acquisition of assets | (3,000 | ) | — | |||||
Purchases of property and equipment | (113 | ) | (28 | ) | ||||
Sales of used lease pool equipment | 1,620 | 4,496 | ||||||
Net cash (used in) provided by investing activities | (1,683 | ) | 4,310 | |||||
Cash flows from financing activities: | ||||||||
Net payments on revolving line of credit | — | (3,500 | ) | |||||
Payments on term loan and other borrowings | — | (2,807 | ) | |||||
Net proceeds from preferred stock offering | 3,812 | 27 | ||||||
Preferred stock dividends | (385 | ) | (194 | ) | ||||
Net cash provided by (used in) financing activities | 3,427 | (6,474 | ) | |||||
Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash | 322 | (3 | ) | |||||
Net change in cash, cash equivalents and restricted cash | (1,300 | ) | (1,055 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 10,146 | 3,511 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 8,846 | $ | 2,456 |
For the Three Months Ended April 30, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Reconciliation of Net loss to EBITDA and Adjusted EBITDA | ||||||||
Net loss | $ | (5,905 | ) | $ | (2,665 | ) | ||
Interest (income) expense, net | (18 | ) | 46 | |||||
Depreciation and amortization | 3,303 | 4,791 | ||||||
Provision for income taxes | 437 | 229 | ||||||
EBITDA (1) | (2,183 | ) | 2,401 | |||||
Non-cash foreign exchange (gains) losses | (49 | ) | 194 | |||||
Stock-based compensation | 126 | 224 | ||||||
Cost of lease pool sales | 627 | 6,139 | ||||||
Adjusted EBITDA (1) | $ | (1,479 | ) | $ | 8,958 | |||
Reconciliation of Net cash provided by operating activities to EBITDA | ||||||||
Net cash (used in) provided by operating activities | $ | (3,366 | ) | $ | 1,112 | |||
Stock-based compensation | (126 | ) | (224 | ) | ||||
Provision for doubtful accounts | (200 | ) | — | |||||
Provision for inventory obsolescence | — | (8 | ) | |||||
Changes in trade accounts, contracts and notes receivable | (1,488 | ) | (2,175 | ) | ||||
Interest paid | 1 | 92 | ||||||
Taxes paid, net of refunds | 46 | 13 | ||||||
Gross profit from sale of lease pool equipment | 536 | 2,689 | ||||||
Changes in inventory | 844 | 1,403 | ||||||
Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue | (266 | ) | (48 | ) | ||||
Changes in prepaid expenses and other current assets | 1,520 | (549 | ) | |||||
Foreign exchange (losses) gains | (16 | ) | 48 | |||||
Other | 332 | 48 | ||||||
EBITDA (1) | $ | (2,183 | ) | $ | 2,401 |
(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 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 and finance working capital requirements. 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. |
For the Three Months Ended April 30, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Sale of marine technology products | $ | 3,708 | $ | 6,911 | ||||
Equipment leasing | 4,047 | 11,545 | ||||||
Inter-segment sales | (142 | ) | (23 | ) | ||||
Total revenues | 7,613 | 18,433 | ||||||
Cost of sales: | ||||||||
Marine technology products | 2,228 | 3,998 | ||||||
Equipment leasing | 4,282 | 11,264 | ||||||
Inter-segment costs | (142 | ) | (23 | ) | ||||
Total cost of sales | 6,368 | 15,239 | ||||||
Gross profit | 1,245 | 3,194 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 5,630 | 4,804 | ||||||
Research and development | 370 | 98 | ||||||
Provision for doubtful accounts | 200 | — | ||||||
Depreciation and amortization | 617 | 581 | ||||||
Total operating expenses | 6,817 | 5,483 | ||||||
Operating loss | $ | (5,572 | ) | $ | (2,289 | ) | ||
Marine Technology Products Segment: | ||||||||
Revenues: | ||||||||
Seamap | $ | 1,752 | $ | 4,886 | ||||
Klein | 1,512 | 938 | ||||||
SAP | 480 | 1,290 | ||||||
Intra-segment sales | (36 | ) | (203 | ) | ||||
3,708 | 6,911 | |||||||
Cost of sales: | ||||||||
Seamap | 844 | 2,561 | ||||||
Klein | 1,036 | 732 | ||||||
SAP | 398 | 1,017 | ||||||
Intra-segment sales | (50 | ) | (312 | ) | ||||
2,228 | 3,998 | |||||||
Gross profit | $ | 1,480 | $ | 2,913 | ||||
Gross profit margin | 40 | % | 42 | % | ||||
Equipment Leasing Segment: | ||||||||
Revenue: | ||||||||
Equipment leasing | $ | 2,697 | $ | 2,717 | ||||
Lease pool equipment sales | 1,163 | 8,828 | ||||||
Other equipment sales | 187 | — | ||||||
4,047 | 11,545 | |||||||
Cost of sales: | ||||||||
Direct costs-equipment leasing | 928 | 944 | ||||||
Lease pool depreciation | 2,654 | 4,181 | ||||||
Cost of lease pool equipment sales | 627 | 6,139 | ||||||
Cost of other equipment sales | 73 | — | ||||||
4,282 | 11,264 | |||||||
Gross (loss) profit | $ | (235 | ) | $ | 281 | |||
Gross (loss) profit margin | (6 | )% | 2 | % |