FORM 10-Q |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Texas | 76-0210849 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
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Item 4. | ||
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Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
July 31, 2018 | January 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 6,886 | $ | 9,902 | |||
Restricted cash | 223 | 244 | |||||
Accounts and contracts receivable, net of allowance for doubtful accounts of $3,115 and $3,885 at July 31, 2018 and January 31, 2018, respectively | 11,498 | 10,494 | |||||
Inventories, net | 11,855 | 10,856 | |||||
Prepaid expenses and other current assets | 1,970 | 1,550 | |||||
Total current assets | 32,432 | 33,046 | |||||
Seismic equipment lease pool and property and equipment, net | 19,765 | 22,900 | |||||
Intangible assets, net | 11,037 | 8,015 | |||||
Goodwill | 2,531 | 2,531 | |||||
Non-current prepaid income taxes | 1,570 | 1,609 | |||||
Long-term receivables, net of allowance for doubtful accounts of $532 and $2,282 at July 31, 2018 and January 31, 2018, respectively | 168 | 4,652 | |||||
Other assets | 611 | 926 | |||||
Total assets | $ | 68,114 | $ | 73,679 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,038 | $ | 1,271 | |||
Deferred revenue | 460 | 741 | |||||
Accrued expenses and other current liabilities | 4,776 | 5,253 | |||||
Income taxes payable | 886 | 258 | |||||
Total current liabilities | 8,160 | 7,523 | |||||
Deferred tax liability | — | 307 | |||||
Total liabilities | 8,160 | 7,830 | |||||
Shareholders’ equity: | |||||||
Preferred stock, $1.00 par value; 1,000 shares authorized; 768 and 532 issued and outstanding at July 31, 2018 and January 31, 2018, respectively | 16,950 | 11,544 | |||||
Common stock, $0.01 par value; 20,000 shares authorized; 14,049 and 14,019 shares issued at July 31, 2018 and January 31, 2018, respectively | 140 | 140 | |||||
Additional paid-in capital | 122,672 | 122,304 | |||||
Treasury stock, at cost (1,929 shares at July 31, 2018 and January 31, 2018) | (16,860 | ) | (16,860 | ) | |||
Accumulated deficit | (53,715 | ) | (42,425 | ) | |||
Accumulated other comprehensive loss | (9,233 | ) | (8,854 | ) | |||
Total shareholders’ equity | 59,954 | 65,849 | |||||
Total liabilities and shareholders’ equity | $ | 68,114 | $ | 73,679 |
For the Three Months Ended July 31, | For the Six Months Ended July 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Sale of marine technology products | $ | 5,877 | $ | 9,586 | $ | 9,443 | $ | 16,474 | ||||||||
Equipment leasing | 1,630 | 977 | 4,327 | 3,694 | ||||||||||||
Sale of lease pool equipment | 843 | 273 | 2,193 | 9,101 | ||||||||||||
Total revenues | 8,350 | 10,836 | 15,963 | 29,269 | ||||||||||||
Cost of sales: | ||||||||||||||||
Sale of marine technology products | 3,216 | 5,868 | 5,302 | 9,843 | ||||||||||||
Equipment leasing (including lease pool depreciation of $2,445 and $3,750 for the three months ended July 31, 2018 and 2017 respectively, and $5,099 and $7,931 for the six months ended July 31, 2018 and 2017 respectively) | 3,242 | 4,290 | 6,824 | 9,415 | ||||||||||||
Lease pool equipment sales | 32 | 60 | 732 | 6,199 | ||||||||||||
Total cost of sales | 6,490 | 10,218 | 12,858 | 25,457 | ||||||||||||
Gross profit | 1,860 | 618 | 3,105 | 3,812 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 5,504 | 4,825 | 11,134 | 9,629 | ||||||||||||
Research and development | 312 | 240 | 682 | 338 | ||||||||||||
Provision for doubtful accounts | — | — | 200 | — | ||||||||||||
Depreciation and amortization | 620 | 525 | 1,237 | 1,106 | ||||||||||||
Total operating expenses | 6,436 | 5,590 | 13,253 | 11,073 | ||||||||||||
Operating loss | (4,576 | ) | (4,972 | ) | (10,148 | ) | (7,261 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest income (expense), net | 17 | 17 | 35 | (29 | ) | |||||||||||
Other, net | 55 | (52 | ) | 141 | (153 | ) | ||||||||||
Total other income (expense) | 72 | (35 | ) | 176 | (182 | ) | ||||||||||
Loss before income taxes | (4,504 | ) | (5,007 | ) | (9,972 | ) | (7,443 | ) | ||||||||
Provision for income taxes | (85 | ) | (357 | ) | (522 | ) | (586 | ) | ||||||||
Net loss | $ | (4,589 | ) | $ | (5,364 | ) | $ | (10,494 | ) | $ | (8,029 | ) | ||||
Preferred stock dividends | (411 | ) | (207 | ) | (796 | ) | (401 | ) | ||||||||
Net loss attributable to common shareholders | $ | (5,000 | ) | $ | (5,571 | ) | $ | (11,290 | ) | $ | (8,430 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic | $ | (0.41 | ) | $ | (0.46 | ) | $ | (0.93 | ) | $ | (0.70 | ) | ||||
Diluted | $ | (0.41 | ) | $ | (0.46 | ) | $ | (0.93 | ) | $ | (0.70 | ) | ||||
Shares used in computing net loss per common share: | ||||||||||||||||
Basic | 12,093 | 12,082 | 12,090 | 12,080 | ||||||||||||
Diluted | 12,093 | 12,082 | 12,090 | 12,080 |
For the Three Months Ended July 31, | For the Six Months Ended July 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net loss available to common shareholders | $ | (5,000 | ) | $ | (5,571 | ) | $ | (11,290 | ) | $ | (8,430 | ) | ||||
Change in cumulative translation adjustment | (142 | ) | 846 | (379 | ) | 875 | ||||||||||
Comprehensive loss attributable to common shareholders | $ | (5,142 | ) | $ | (4,725 | ) | $ | (11,669 | ) | $ | (7,555 | ) |
For the Six Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (10,494 | ) | $ | (8,029 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
Depreciation and amortization | 6,399 | 9,095 | ||||||
Stock-based compensation | 368 | 461 | ||||||
Provision for inventory obsolescence | 115 | 67 | ||||||
Provision for doubtful accounts, net of charge offs | 200 | — | ||||||
Gross profit from sale of lease pool equipment | (1,246 | ) | (2,852 | ) | ||||
Deferred tax expense | (306 | ) | (57 | ) | ||||
Changes in: | ||||||||
Trade accounts and contracts receivable | 2,227 | 5,877 | ||||||
Unbilled revenue | (341 | ) | — | |||||
Inventories | (1,406 | ) | (107 | ) | ||||
Prepaid expenses and other current assets | (1,435 | ) | 201 | |||||
Income taxes receivable and payable | 665 | 430 | ||||||
Accounts payable, accrued expenses and other current liabilities | (1,551 | ) | (929 | ) | ||||
Deferred revenue | 942 | — | ||||||
Foreign exchange losses net of gains | 64 | (71 | ) | |||||
Net cash (used in) provided by operating activities | (5,799 | ) | 4,086 | |||||
Cash flows from investing activities: | ||||||||
Purchases of seismic equipment held for lease | (1,386 | ) | (234 | ) | ||||
Acquisition of assets | (3,000 | ) | — | |||||
Purchases of property and equipment | (487 | ) | (128 | ) | ||||
Sale of used lease pool equipment | 2,792 | 6,020 | ||||||
Net cash (used in) provided by investing activities | (2,081 | ) | 5,658 | |||||
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 | 5,450 | 774 | ||||||
Preferred stock dividends | (796 | ) | (401 | ) | ||||
Net cash provided by (used in) financing activities | 4,654 | (5,934 | ) | |||||
Effect of changes in foreign exchange rates on cash, cash equivalents and restricted cash | 189 | (169 | ) | |||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (3,037 | ) | 3,641 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 10,146 | 3,511 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 7,109 | $ | 7,152 | ||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | 2 | $ | 120 | ||||
Income taxes paid | $ | 268 | $ | 159 | ||||
Purchases of seismic equipment held for lease in accounts payable at end of period | $ | 264 | $ | 42 |
Three Months Ended July 31, 2018 | Six Months Ended July 31, 2018 | |||||||
Revenue recognized at a point in time: | (in thousands) | |||||||
Seamap | $ | 3,611 | $ | 5,156 | ||||
Klein | 1,401 | 2,877 | ||||||
SAP | 797 | 1,277 | ||||||
Total revenue recognized at a point in time | $ | 5,809 | $ | 9,310 | ||||
Revenue recognized over time: | ||||||||
Seamap | $ | 203 | $ | 410 | ||||
Total revenue recognized over time | 203 | 410 | ||||||
Total revenue from contracts with customers | $ | 6,012 | $ | 9,720 |
Three Months Ended July 31, 2018 | Six Months Ended July 31, 2018 | |||||||
(in thousands) | ||||||||
United States | $ | 1,124 | $ | 1,252 | ||||
Europe, Russia & CIS | 2,747 | 4,766 | ||||||
Middle East & Africa | 122 | 636 | ||||||
Asia-Pacific | 1,979 | 2,679 | ||||||
Canada & Latin America | 40 | 387 | ||||||
Total revenue from contracts with customers | $ | 6,012 | $ | 9,720 |
July 31, 2018 | ||||
Contract Assets: | (in thousands) | |||
Unbilled revenue-current | $ | 341 | ||
Unbilled revenue - non-current | — | |||
Total unbilled revenue | $ | 341 | ||
Contract Liabilities: | ||||
Deferred revenue & customer deposits - current | $ | 934 | ||
Deferred revenue & customer deposits - non-current | 8 | |||
Total deferred revenue & customer deposits | $ | 942 |
Purchase Price: | |||
Cash | $ | 3,000 | |
Release of claims against Hydroscience | 1,144 | ||
Transaction costs | 312 | ||
Total purchase price | $ | 4,456 | |
Allocation of purchase price: | |||
Inventory | $ | 206 | |
Tangible assets (mainly manufacturing equipment) | 350 | ||
Intangible assets (including patents, designs & software) | 3,900 | ||
Total purchase price | $ | 4,456 |
July 31, 2018 | January 31, 2018 | |||||||
(in thousands) | ||||||||
Receivables: | ||||||||
Accounts receivable | $ | 11,490 | $ | 16,392 | ||||
Contracts receivable | 3,823 | 4,921 | ||||||
15,313 | 21,313 | |||||||
Less long-term portion | (700 | ) | (6,934 | ) | ||||
Current accounts and contracts receivable | 14,613 | 14,379 | ||||||
Less current portion of allowance for doubtful accounts | (3,115 | ) | (3,885 | ) | ||||
Current portion of accounts and contracts receivable, net of allowance for doubtful accounts | $ | 11,498 | $ | 10,494 |
July 31, 2018 | January 31, 2018 | |||||||
(in thousands) | ||||||||
Inventories: | ||||||||
Raw materials | $ | 4,842 | $ | 5,099 | ||||
Finished goods | 6,138 | 6,185 | ||||||
Work in progress | 1,929 | 1,247 | ||||||
12,909 | 12,531 | |||||||
Less allowance for obsolescence | (1,054 | ) | (1,675 | ) | ||||
Total inventories, net | $ | 11,855 | $ | 10,856 |
July 31, 2018 | January 31, 2018 | |||||||
(in thousands) | ||||||||
Seismic equipment lease pool and property and equipment: | ||||||||
Seismic equipment lease pool | $ | 168,646 | $ | 174,274 | ||||
Land and buildings | 3,381 | 3,380 | ||||||
Furniture and fixtures | 11,166 | 10,222 | ||||||
Autos and trucks | 778 | 722 | ||||||
183,971 | 188,598 | |||||||
Accumulated depreciation and amortization | (164,206 | ) | (165,698 | ) | ||||
Total seismic equipment lease pool and property and equipment, net | $ | 19,765 | $ | 22,900 |
Weighted Average Life at 7/31/2018 | July 31, 2018 | January 31, 2018 | |||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Impairment | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Impairment | Net Carrying Amount | ||||||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||||||
Goodwill | $ | 7,060 | $ | — | $ | (4,529 | ) | $ | 2,531 | $ | 7,060 | $ | — | $ | (4,529 | ) | $ | 2,531 | |||||||||||||||
Proprietary rights | 7.9 | $ | 9,286 | $ | (3,915 | ) | $ | — | $ | 5,371 | $ | 6,181 | $ | (3,663 | ) | $ | — | $ | 2,518 | ||||||||||||||
Customer relationships | 3.3 | 5,024 | (2,805 | ) | — | 2,219 | 5,024 | (2,464 | ) | — | 2,560 | ||||||||||||||||||||||
Patents | 5.9 | 2,441 | (903 | ) | — | 1,538 | 1,730 | (778 | ) | — | 952 | ||||||||||||||||||||||
Trade name | 7.8 | 894 | (46 | ) | — | 848 | 894 | (41 | ) | — | 853 | ||||||||||||||||||||||
Developed technology | 7.4 | 1,430 | (369 | ) | — | 1,061 | 1,430 | (298 | ) | — | 1,132 | ||||||||||||||||||||||
Amortizable intangible assets | $ | 19,075 | $ | (8,038 | ) | $ | — | $ | 11,037 | $ | 15,259 | $ | (7,244 | ) | $ | — | $ | 8,015 |
For fiscal years ending January 31 (in thousands): | |||
2019 | $ | 902 | |
2020 | 1,783 | ||
2021 | 1,636 | ||
2022 | 1,150 | ||
2023 | 964 | ||
2024 and thereafter | 4,602 | ||
Total | $ | 11,037 |
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
(in thousands) | (in thousands) | |||||||||||
Basic weighted average common shares outstanding | 12,093 | 12,082 | 12,090 | 12,080 | ||||||||
Stock options | 84 | 83 | 63 | 104 | ||||||||
Unvested restricted stock | 3 | 35 | 15 | 37 | ||||||||
Total weighted average common share equivalents | 87 | 118 | 78 | 141 | ||||||||
Diluted weighted average common shares outstanding | 12,180 | 12,200 | 12,168 | 12,221 |
As of July 31, 2018 | As of January 31, 2018 | |||||||
Total Assets | Total Assets | |||||||
(in thousands) | ||||||||
Marine Technology Products | $ | 43,228 | $ | 35,879 | ||||
Equipment Leasing | 24,918 | 37,850 | ||||||
Eliminations | (32 | ) | (50 | ) | ||||
Consolidated | $ | 68,114 | $ | 73,679 |
Revenues | Operating income (loss) | Income (loss) before taxes | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Marine Technology Products | $ | 6,012 | $ | 9,662 | $ | (1,016 | ) | $ | 850 | $ | (973 | ) | $ | 882 | ||||||||||
Equipment Leasing | 2,473 | 1,271 | (2,655 | ) | (4,988 | ) | (2,626 | ) | (5,041 | ) | ||||||||||||||
Corporate expenses | — | — | (905 | ) | (834 | ) | (905 | ) | (834 | ) | ||||||||||||||
Eliminations | (135 | ) | (97 | ) | — | — | — | (14 | ) | |||||||||||||||
Consolidated | $ | 8,350 | $ | 10,836 | $ | (4,576 | ) | $ | (4,972 | ) | $ | (4,504 | ) | $ | (5,007 | ) |
Revenues | Operating income (loss) | Income (loss) before taxes | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Marine Technology Products | $ | 9,720 | $ | 16,573 | $ | (3,391 | ) | $ | 1,234 | $ | (3,322 | ) | $ | 995 | ||||||||||
Equipment Leasing | 6,520 | 12,816 | (5,022 | ) | (6,644 | ) | (4,916 | ) | (6,561 | ) | ||||||||||||||
Corporate expenses | — | — | (1,735 | ) | (1,851 | ) | (1,735 | ) | (1,851 | ) | ||||||||||||||
Eliminations | (277 | ) | (120 | ) | — | — | 1 | (26 | ) | |||||||||||||||
Consolidated | $ | 15,963 | $ | 29,269 | $ | (10,148 | ) | $ | (7,261 | ) | $ | (9,972 | ) | $ | (7,443 | ) |
• | decline in the demand for seismic data and our services; |
• | the effect of changing economic conditions and fluctuations in oil and natural gas prices on exploration activities; |
• | the effect of uncertainty in financial markets on our customers’ and our ability to obtain financing; |
• | loss of significant customers; |
• | increased competition; |
• | loss of key suppliers; |
• | uncertainties regarding our foreign operations, including political, economic and currency risks; |
• | seasonal fluctuations that can adversely affect our business; |
• | fluctuations due to circumstances beyond our control or that of our customers; |
• | defaults by customers on amounts due us; |
• | possible further impairment of our long-lived assets due to technological obsolescence or changes in anticipated cash flow generated from those assets; |
• | inability to obtain funding or to obtain funding under acceptable terms; |
• | intellectual property claims by third parties; |
• | risks associated with our manufacturing operations; |
• | the impact of economic and trade sanctions imposed on Russia by the United States and the European Union in response to the political unrest in Ukraine; and |
• | other risks associated with our foreign operations, including foreign currency exchange risk. |
For the Three Months Ended July 31, | For the Six Months Ended July 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Revenues: | ||||||||||||||||
Marine technology products | $ | 6,012 | $ | 9,662 | $ | 9,720 | $ | 16,573 | ||||||||
Equipment Leasing | 2,473 | 1,271 | 6,520 | 12,816 | ||||||||||||
Less inter-segment sales | (135 | ) | (97 | ) | (277 | ) | (120 | ) | ||||||||
Total revenues | 8,350 | 10,836 | 15,963 | 29,269 | ||||||||||||
Cost of sales: | ||||||||||||||||
Marine technology products | 3,351 | 5,943 | 5,579 | 9,942 | ||||||||||||
Equipment Leasing | 3,274 | 4,373 | 7,556 | 15,636 | ||||||||||||
Less inter-segment costs | (135 | ) | (98 | ) | (277 | ) | (121 | ) | ||||||||
Total costs of sales | 6,490 | 10,218 | 12,858 | 25,457 | ||||||||||||
Gross profit (loss) | ||||||||||||||||
Marine technology products | 2,661 | 3,719 | 4,141 | 6,631 | ||||||||||||
Equipment leasing | (801 | ) | (3,102 | ) | (1,036 | ) | (2,820 | ) | ||||||||
Inter-segment amounts | — | 1 | — | 1 | ||||||||||||
Total gross profit (loss) | 1,860 | 618 | 3,105 | 3,812 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 5,504 | 4,825 | 11,134 | 9,629 | ||||||||||||
Research and development | 312 | 240 | 682 | 338 | ||||||||||||
Provision for doubtful accounts | — | — | 200 | — | ||||||||||||
Depreciation and amortization | 620 | 525 | 1,237 | 1,106 | ||||||||||||
Total operating expenses | 6,436 | 5,590 | 13,253 | 11,073 | ||||||||||||
Operating loss | $ | (4,576 | ) | $ | (4,972 | ) | $ | (10,148 | ) | $ | (7,261 | ) |
EBITDA (1) | $ | (1,425 | ) | $ | (720 | ) | $ | (3,608 | ) | $ | 1,681 | |||||
Adjusted EBITDA (1) | $ | (1,114 | ) | $ | (261 | ) | $ | (2,593 | ) | $ | 8,697 | |||||
Reconciliation of Net loss to EBITDA and Adjusted EBITDA | ||||||||||||||||
Net loss | $ | (4,589 | ) | $ | (5,364 | ) | $ | (10,494 | ) | $ | (8,029 | ) | ||||
Interest (income) expense, net | (17 | ) | (17 | ) | (35 | ) | 29 | |||||||||
Depreciation and amortization | 3,096 | 4,304 | 6,399 | 9,095 | ||||||||||||
Provision for income taxes | 85 | 357 | 522 | 586 | ||||||||||||
EBITDA (1) | (1,425 | ) | (720 | ) | (3,608 | ) | 1,681 | |||||||||
Non-cash foreign exchange losses | 62 | 167 | 13 | 361 | ||||||||||||
Stock-based compensation | 242 | 237 | 368 | 461 | ||||||||||||
Cost of lease pool sales | 7 | 55 | 634 | 6,194 | ||||||||||||
Adjusted EBITDA (1) | $ | (1,114 | ) | $ | (261 | ) | $ | (2,593 | ) | $ | 8,697 | |||||
Reconciliation of Net cash provided by operating activities to EBITDA | ||||||||||||||||
Net cash (used in) provided by operating activities | $ | (2,433 | ) | $ | 2,974 | $ | (5,799 | ) | $ | 4,086 | ||||||
Stock-based compensation | (242 | ) | (237 | ) | (368 | ) | (461 | ) | ||||||||
Provision for doubtful accounts | — | — | (200 | ) | — | |||||||||||
Provision for inventory obsolescence | (115 | ) | (59 | ) | (115 | ) | (67 | ) | ||||||||
Changes in trade accounts, contracts and notes receivable | (398 | ) | (3,702 | ) | (1,886 | ) | (5,877 | ) | ||||||||
Interest paid | 1 | 28 | 2 | 120 | ||||||||||||
Taxes paid, net of refunds | 222 | 146 | 268 | 159 | ||||||||||||
Gross profit from sale of lease pool equipment | 710 | 163 | 1,246 | 2,852 | ||||||||||||
Changes in inventory | 562 | (1,296 | ) | 1,406 | 107 | |||||||||||
Changes in accounts payable, accrued expenses and other current liabilities and deferred revenue | 875 | 977 | 609 | 929 | ||||||||||||
Changes in prepaid expenses and other current assets | (85 | ) | 348 | 1,435 | (201 | ) | ||||||||||
Foreign exchange (losses) gains, net | (48 | ) | 23 | (64 | ) | 71 | ||||||||||
Other | (474 | ) | (85 | ) | (142 | ) | (37 | ) | ||||||||
EBITDA (1) | $ | (1,425 | ) | $ | (720 | ) | $ | (3,608 | ) | $ | 1,681 |
(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 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 and 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. |
• | A reduction in demand for seismic services brought about by reduced oil and gas exploration activities, which was in turn caused by lower prices for oil and gas and by excess inventories of those commodities. |
• | An excess of capacity in the seismic industry, specifically excess supplies of seismic equipment. |
• | Technological advances which have reduced the cost of certain seismic equipment, therefore resulting in pressure on prices for the rental or sale of such equipment. |
• | Increased competition among providers of seismic equipment. |
• | Increased emphasis on our Marine Technology Products segment. We are expanding our product offerings with an emphasis on products and services that are not exclusively dependent upon oil and gas exploration activity. We expect new products and services to come from a combination of internally developed products and those acquired from third parties, such as the new products introduced in March 2018 as discussed above. |
• | Decrease capital deployed in lease pool. We expect our Equipment Leasing segment to remain an important component of our business; however, we believe capital can in some cases be more efficiently deployed in other areas. In recent periods we have sold assets from the lease pool and have used those proceeds to repay debt and invest in other operations. We also have limited investment in new lease pool assets in recent periods; therefore, our investment in the lease pool has decreased significantly. We may, however, make additional lease pool investments in the future. |
• | Utilize our broad geographical footprint. We believe our world-wide locations and exposure to a number of different geographical markets provides an advantage over many competitors. However, we are reducing the scope of certain of those operations to reflect the changed environment of our Equipment Leasing segment. Other locations may be expanded from time-to-time in response to increased activity, particularly related to our Marine Technology Products segment. |
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Revenues: | ||||||||||||||||
Seamap | $ | 3,814 | $ | 7,490 | $ | 5,566 | $ | 12,377 | ||||||||
Klein | 1,591 | 1,002 | 3,103 | 1,939 | ||||||||||||
SAP | 797 | 1,622 | 1,277 | 2,911 | ||||||||||||
Intra-segment sales | (190 | ) | (452 | ) | (226 | ) | (654 | ) | ||||||||
6,012 | 9,662 | 9,720 | 16,573 | |||||||||||||
Cost of sales: | ||||||||||||||||
Seamap | 1,785 | 4,206 | 2,629 | 6,767 | ||||||||||||
Klein | 1,090 | 944 | 2,126 | 1,677 | ||||||||||||
SAP | 666 | 1,245 | 1,064 | 2,262 | ||||||||||||
Intra-segment sales | (190 | ) | (452 | ) | (240 | ) | (764 | ) | ||||||||
3,351 | 5,943 | 5,579 | 9,942 | |||||||||||||
Gross profit | $ | 2,661 | $ | 3,719 | $ | 4,141 | $ | 6,631 | ||||||||
Gross profit margin | 44 | % | 38 | % | 43 | % | 40 | % |
Three Months Ended July 31, | Six Months Ended July 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Revenue: | ||||||||||||||||
Equipment leasing | $ | 1,630 | $ | 977 | $ | 4,327 | $ | 3,694 | ||||||||
Lease pool equipment sales | 718 | 228 | 1,881 | 9,062 | ||||||||||||
Other equipment sales | 125 | 66 | 312 | 60 | ||||||||||||
2,473 | 1,271 | 6,520 | 12,816 | |||||||||||||
Cost of sales: | ||||||||||||||||
Direct costs-equipment leasing | 797 | 561 | 1,725 | 1,505 | ||||||||||||
Lease pool depreciation | 2,445 | 3,750 | 5,099 | 7,931 | ||||||||||||
Cost of lease pool equipment sales | 7 | 66 | 634 | 6,195 | ||||||||||||
Cost of other equipment sales | 25 | (4 | ) | 98 | 5 | |||||||||||
3,274 | 4,373 | 7,556 | 15,636 | |||||||||||||
Gross loss | $ | (801 | ) | $ | (3,102 | ) | $ | (1,036 | ) | $ | (2,820 | ) |
For the Six Months Ended July 31, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Net cash (used in) provided by operating activities | $ | (5,799 | ) | $ | 4,086 | |||
Net cash (used in) provided by investing activities | (2,081 | ) | 5,658 | |||||
Net cash provided by (used in) financing activities | 4,654 | (5,934 | ) | |||||
Effect of changes in foreign exchange rates on cash and cash equivalents | 189 | (169 | ) | |||||
Net (decrease) increase in cash and cash equivalents | $ | (3,037 | ) | $ | 3,641 |
(a) | Not applicable. |
(b) | Not applicable. |
Exhibit Number | Document Description | Report or Registration Statement | SEC File or Registration Number | Exhibit Reference |
3.1 | Incorporated by reference to Mitcham Industries, Inc.’s Registration Statement on Form S-8, filed with the SEC on August 9, 2001. | 333-67208 | 3.1 | |
3.2 | Incorporated by reference to Mitcham Industries, Inc.’s Current Report on Form 8-K, filed with the SEC on August 2, 2010. | 000-25142 | 3.1(i) | |
3.3 | Incorporated by reference to Mitcham Industries, Inc.’s Form 8-K filed with SEC on June 10, 2016. | 001-13490 | 3.1 | |
3.4 | Incorporated by reference to Mitcham Industries, Inc.’s form 8-K filed with the SEC on October 7, 2016. | 001-13490 | 3.1 | |
3.5 | Incorporated by reference to Mitcham Industries, Inc.’s form 8-K filed with the SEC on February 12, 2018. | 001-13490 | 3.1 | |
31.1† | ||||
31.2† | ||||
32.1* | ||||
101.INS† | XBRL Instance Document | |||
101.SCH† | XBRL Taxonomy Extension Schema Document | |||
101.CAL† | XBRL Taxonomy Extension Calculation of Linkbase Document | |||
101.DEF† | XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB† | XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE† | XBRL Taxonomy Extension Presentation Linkbase Document |
MITCHAM INDUSTRIES, INC. | ||||||
Date: September 7, 2018 | /s/ Robert P. Capps | |||||
Robert P. Capps | ||||||
Co-Chief Executive Officer, | ||||||
Executive Vice President of Finance and Chief Financial Officer | ||||||
(Duly Authorized Officer) |
Document and Entity Information - shares |
6 Months Ended | |
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Jul. 31, 2018 |
Sep. 05, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 31, 2018 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | MIND | |
Entity Registrant Name | MITCHAM INDUSTRIES INC | |
Entity Central Index Key | 0000926423 | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 12,119,399 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jul. 31, 2018 |
Jan. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 3,115 | $ 3,885 |
Allowance for doubtful accounts | $ 532 | $ 2,282 |
Preferred stock, par value (in usd per share) | $ 1.00 | $ 1.00 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 768,000 | 532,000 |
Preferred stock, shares outstanding (in shares) | 768,000 | 532,000 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 14,049,000 | 14,019,000 |
Treasury stock, shares (in shares) | 1,929,000 | 1,929,000 |
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jul. 31, 2018 |
Jul. 31, 2017 |
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Income Statement [Abstract] | ||||
Lease pool depreciation | $ 2,445 | $ 3,750 | $ 5,099 | $ 7,931 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
Jul. 31, 2018 |
Jul. 31, 2017 |
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Statement of Comprehensive Income [Abstract] | ||||
Net loss available to common shareholders | $ (5,000) | $ (5,571) | $ (11,290) | $ (8,430) |
Change in cumulative translation adjustment | (142) | 846 | (379) | 875 |
Comprehensive loss attributable to common shareholders | $ (5,142) | $ (4,725) | $ (11,669) | $ (7,555) |
Organization |
6 Months Ended |
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Jul. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Mitcham Industries, Inc., a Texas corporation (the “Company”), was incorporated in 1987. The Company, through its wholly owned subsidiary, Seamap International Holdings Pte, Ltd. (“Seamap”), and its wholly owned subsidiary, Klein Marine Systems, Inc. (“Klein”), designs, manufactures and sells a broad range of proprietary products for the seismic, hydrographic and offshore industries with product sales and support facilities based in New Hampshire, Singapore and the United Kingdom. The Company, through its wholly owned Australian subsidiary, Seismic Asia Pacific Pty Ltd. (“SAP”), provides seismic, oceanographic and hydrographic leasing and sales worldwide, primarily in Southeast Asia and Australia. The Company, through its wholly owned Canadian subsidiary, Mitcham Canada, ULC (“MCL”), its wholly owned Russian subsidiary, Mitcham Seismic Eurasia LLC (“MSE”), its wholly owned Hungarian subsidiary, Mitcham Europe Ltd. (“MEL”), its wholly owned Singaporean subsidiary, Mitcham Marine Leasing Pte. Ltd. (“MML”), and its branch operations in Colombia, provides full-service equipment leasing, sales and service to the seismic industry worldwide. All intercompany transactions and balances have been eliminated in consolidation. |
Basis of Presentation |
6 Months Ended |
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Jul. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated balance sheet as of January 31, 2018 for the Company has been derived from audited consolidated financial statements. The unaudited interim condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2018. In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of July 31, 2018, the results of operations for the three and six months ended July 31, 2018 and 2017, and the cash flows for the six months ended July 31, 2018 and 2017, have been included in these condensed consolidated financial statements. The foregoing interim results are not necessarily indicative of the results of operations to be expected for the full fiscal year ending January 31, 2019. |
New Accounting Pronouncements |
6 Months Ended |
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Jul. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to simplify impairment testing of goodwill and other intangible assets by eliminating step two of the impairment test. The Company has adopted the provisions of ASU 2017-04 as of January 31, 2018. The adoption of ASU 2017-04 did not have a material effect on the Company's condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The Company has adopted the provisions of ASU No. 2016-15 as of February 1, 2018. The adoption of ASU No. 2016-15 did not have a material effect on the Company’s condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. More specifically, the new guidance requires a lessee to recognize assets and liabilities for leases with terms of more than 12 months. ASU No. 2016-02 will be effective during the Company’s fiscal year ended January 31, 2020. Management has not yet completed its assessment of the impact of the new guidance. However, based on a preliminary review, the Company does not expect the adoption of ASU No. 2016-02 to have a material impact on its financial statements. The Company is continuing its assessment, which may identify additional impacts the adoption of ASU No. 2016-02 will have on its consolidated financial statements and disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 was later amended by ASU No. 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients . ASU 2014-09, as amended, (the “New Revenue Standard”) supersedes most industry specific guidance and intends to enhance comparability of revenue recognition practices across entities and industries by providing a principle-based, comprehensive framework for addressing revenue recognition issues. The Company adopted the New Revenue Standard as of February 1, 2018 using the modified retrospective method. The adoption of the New Revenue Standard did not have a material impact on the Company’s consolidated financial statements. |
Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers Effective February 1, 2018 the Company adopted the New Revenue Standard using the modified retrospective method applied to those contracts which were not completed as of February 1, 2018. Results for reporting periods beginning after January 31, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. Under the New Revenue Standard, revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company has determined that the New Revenue Standard applies to contracts performed by the businesses in our Marine Technology Products segment, but not to contracts performed by our Equipment Leasing segment which are within the scope of other revenue recognition standards. The impact of adopting the New Revenue Standard was not material, as the analysis of our contracts under the New Revenue Standard supports the recognition of revenue at a point in time for the majority of our contracts, which is consistent with our revenue recognition model. As a result, the Company did not record an adjustment to opening retained earnings as a result of the adoption of the New Revenue Standard. The following table presents revenue from contracts with customers disaggregated by product line and timing of revenue recognition (in thousands):
The revenue from products manufactured and sold by our Seamap and Klein businesses, as well as the revenue from products marketed and sold by our SAP business, is generally recognized at a point in time, or when the customer takes possession of the product, based on the terms and conditions stipulated in our contracts with customers. Our Seamap business also provides Software Maintenance Agreements (“SMA”) to customers who have an active license for software imbedded in Seamap products. The revenue from SMA’s is recognized over time, with the total value of the SMA amortized in equal monthly amounts over the life of the contract. The following table presents revenue from contracts with customers disaggregated by geography, based on shipping location of our customers (in thousands):
As of July 31, 2018 contract assets and liabilities consisted of the following (in thousands):
Considering the products manufactured and sold by the businesses in our Marine Technology Products segment and the Company’s standard contract terms and conditions, we expect our contract assets and liabilities to turn over, on average, within a three to six month period. Pursuant to practical expedients and exemptions included in the New Revenue Standard, sales and transaction-based taxes are excluded from revenue. Also, we do not disclose the value of unsatisfied performance obligations for contacts with an original expected duration of one year or less. Additionally, we expense costs incurred to obtain contracts when incurred because the amortization period would have been one year or less. These costs are recorded in selling, general and administrative expenses. |
Acquisition of Assets |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Assets | Acquisition of Assets In February 2018 the Company completed the acquisition of intellectual property and certain other assets from Hydroscience Technologies, Inc. and Solid Seismic LLC (collectively “Hydroscience”). Hydroscience designed, manufactured and sold marine sensors and solid streamer technology products primarily for the hydrographic and seismic industries. In April 2017 Hydroscience filed for bankruptcy protection. Mitcham acquired the assets pursuant to an Asset Purchase Agreement and Sale Order (collectively the “Agreement”) that were approved by the bankruptcy court on January 31, 2018. Under the terms of the Agreement, Mitcham acquired certain specified intangible and tangible assets free and clear of all prior claims and encumbrances, and assumed no liabilities, contracts or prior warranty obligations. Details of the purchase price and the allocation of the purchase price to the assets acquired are as follows (in thousands):
The cash portion of the purchase price was financed with the sale of 152,290 shares of our Series A Cumulative Preferred Stock (see Note 10) to Mitsubishi Heavy Industries, Inc. for $3.5 million. |
Balance Sheet |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet | Balance Sheet
Contracts receivable consisted of $3.8 million due from four customers at July 31, 2018 and $4.9 million due from four customers as of January 31, 2018. The balance of contracts receivable at July 31, 2018 and January 31, 2018 consisted of contracts bearing interest at an average rate of approximately 2.7% and 2.2% respectively and with remaining repayment terms from 1 to 40 months. These contracts are related to lease pool equipment sales and are collateralized by the equipment sold.
As of January 31, 2018, the Company completed an annual review of long-lived assets noting that the undiscounted future cash flows exceeded their carrying value and no impairment has been recorded. Since January 31, 2018 there have been no significant changes to the market, economic or legal environment in which the Company operates that would indicate additional impairment analysis is necessary as of July 31, 2018. |
Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets
On January 31, 2018, the Company completed an annual review of goodwill and other intangible assets. Based on a review of qualitative factors it was determined it was more likely than not that the fair value of our Seamap reporting unit was greater than its carrying value. Based on a review of qualitative and quantitative factors it was determined it was more likely than not that the fair value of our Klein reporting unit was not greater than its carrying value. Accordingly, we recorded an impairment of approximately $1.5 million related to the Klein reporting unit in the quarter ended January 31, 2018. During the six months ended July 31, 2018 there have been no substantive indicators of additional impairment. Amortizable intangible assets are amortized over their estimated useful lives of five to 15 years using the straight-line method. Aggregate amortization expense was $889,000 and $716,000 for the six months ended July 31, 2018 and 2017, respectively. As of July 31, 2018, future estimated amortization expense related to amortizable intangible assets was estimated to be:
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Income Taxes |
6 Months Ended |
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Jul. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the six months ended July 31, 2018 the provision for income taxes was approximately $522,000 on a pre-tax net loss of $10.0 million, or an effective tax rate of -5.2%. For the six months ended July 31, 2017 the provision for income taxes was approximately $586,000 on a pre-tax net loss of $7.4 million, or an effective tax rate of -7.9%. The variance between our effective rate and the U.S. statutory rate is due to the mix of pre-tax profit between the U.S. and international taxing jurisdictions with varying statutory rates, the impact of permanent differences, state income and foreign withholding taxes, other tax adjustments, such as valuation allowances against deferred tax assets, and discrete items, including tax expense or benefit recognized for uncertain tax positions. Non-current prepaid income taxes of approximately $1.6 million at July 31, 2018 and at January 31, 2018, consist primarily of foreign taxes. The Company files U.S. federal and state income tax returns as well as separate returns for its foreign subsidiaries within their local jurisdictions. The Company's U.S. federal and state income tax returns are subject to examination by the Internal Revenue Service and state tax authorities for fiscal years ended January 31, 2013 through 2018. In addition, the Company's tax returns filed in foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2013 through 2018. The Company has determined that the undistributed earnings of foreign subsidiaries are not deemed to be indefinitely reinvested outside of the United States as of July 31, 2018. Furthermore, the Company has concluded that any deferred taxes with respect to the undistributed foreign earnings would be immaterial, particularly in light of the one-time repatriation of foreign earnings imposed by the Tax Cuts and Jobs Act legislation enacted in December 2017. Therefore, the Company has not recorded a deferred tax liability associated with the undistributed foreign earnings as of July 31, 2018. For the six months ended July 31, 2018 and July 31, 2017, the Company did not recognize any tax expense or benefit related to uncertain tax positions. The Company prospectively adopted the provisions of ASU 2016-09 beginning February 1, 2017. Accordingly, all excess tax benefits or deficiencies related to employee share-based payments are recognized as income tax benefits or expense in the accompanying Consolidated Statement of Operations and as operating activities in the accompanying Consolidated Statements of Cash Flows. |
Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Earnings per Share Net income per basic common share is computed using the weighted average number of common shares outstanding during the period, excluding unvested restricted stock. Net income per diluted common share is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the period using the treasury stock method. Potential common shares result from the assumed exercise of outstanding common stock options having a dilutive effect and from the assumed vesting of unvested shares of restricted stock. The following table presents the calculation of basic and diluted weighted average common shares used in the earnings per share calculation:
For the three and six month periods ended July 31, 2018 and 2017, potentially dilutive common shares, underlying stock options and unvested restricted stock were anti-dilutive and were therefore not considered in calculating diluted loss per share for those periods. |
Related Party Transaction |
6 Months Ended |
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Jul. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | Related Party Transaction On October 7, 2016 the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Agent”), pursuant to which the Company may sell up to 500,000 shares of 9.00% Series A Cumulative Preferred Stock (the "Preferred Stock'), par value $1.00 per share through the Agent through an at-the-market ("ATM") offering program. The Co-Chief Executive Officer and Co-President of Ladenburg Thalmann & Co. Inc is the Non-Executive Chairman of the Company’s board of directors. Under the Equity Distribution Agreement, the Agent will be entitled to compensation of up to 2.0% of the gross proceeds from the sale of Preferred Stock under the ATM program. For the three and six month periods ended July 31, 2018, the Company issued 48,635 and 62,348 shares of Preferred Stock under the ATM offering program, respectively. Gross proceeds from these sales for the three and six months ended July 31, 2018 were approximately $1.2 million and $1.5 million, respectively, and the Agent received compensation of approximately $23,000 and $30,000, respectively. The Non-Executive Chairman of the Company received no portion of this compensation. |
Equity and Stock-Based Compensation |
6 Months Ended |
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Jul. 31, 2018 | |
Equity [Abstract] | |
Equity and Stock-Based Compensation | Equity and Stock-Based Compensation During the three months ended July 31, 2018, the Company’s Board of Directors declared quarterly dividends of $0.5625 per share for our Preferred Stock. See note 10 to our condensed consolidated financial statements. Total compensation expense recognized for stock-based awards granted under the Company’s equity incentive plan during the three and six month periods ended July 31, 2018 was approximately $242,000 and $368,000, respectively, and during the three and six month periods ended July 31, 2017 was approximately $237,000 and $461,000, respectively. |
Subsequent Events |
6 Months Ended |
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Jul. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In August 2018, the Company completed the sale of its wholly owned Russian subsidiary, Mitcham Seismic Eurasia LLC (“MSE”) for proceeds of approximately $1.0 million U.S. dollars. The proceeds approximate the book value of MSE’s net assets. As a result, management does not believe the transaction will have a material effect on the Company's results of operations. |
Segment Reporting |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting The Marine Technology Products segment is engaged in the design, manufacture and sale of state-of-the-art seismic and offshore telemetry systems. Manufacturing, support and sales facilities are maintained in the UK, Singapore and New Hampshire, with sales offices in Huntsville, Texas and Brisbane, Australia. The Equipment Leasing segment offers for lease or sale, new and “experienced” seismic equipment to the oil and gas industry, seismic contractors, environmental agencies, government agencies and universities. The Equipment Leasing segment is headquartered in Huntsville, Texas, with sales and services offices in Calgary, Canada; Singapore; Brisbane, Australia and Ufa, Bashkortostan, Russia. Financial information by business segment is set forth below (net of any allocations):
Results for the three months ended July 31, 2018 and 2017 were as follows (in thousands):
Results for the six months ended July 31, 2018 and 2017 were as follows (in thousands):
Sales from the Marine Technology Products segment to the Equipment Leasing segment are eliminated in consolidated revenues. Consolidated income before taxes reflects the elimination of profit from intercompany sales and depreciation expense on the difference between the sales price and the cost to manufacture the equipment. Fixed assets are reduced by the difference between the sales price and the cost to manufacture the equipment, less the accumulated depreciation related to the difference. |
Organization (Policies) |
6 Months Ended |
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Jul. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Mitcham Industries, Inc., a Texas corporation (the “Company”), was incorporated in 1987. The Company, through its wholly owned subsidiary, Seamap International Holdings Pte, Ltd. (“Seamap”), and its wholly owned subsidiary, Klein Marine Systems, Inc. (“Klein”), designs, manufactures and sells a broad range of proprietary products for the seismic, hydrographic and offshore industries with product sales and support facilities based in New Hampshire, Singapore and the United Kingdom. The Company, through its wholly owned Australian subsidiary, Seismic Asia Pacific Pty Ltd. (“SAP”), provides seismic, oceanographic and hydrographic leasing and sales worldwide, primarily in Southeast Asia and Australia. The Company, through its wholly owned Canadian subsidiary, Mitcham Canada, ULC (“MCL”), its wholly owned Russian subsidiary, Mitcham Seismic Eurasia LLC (“MSE”), its wholly owned Hungarian subsidiary, Mitcham Europe Ltd. (“MEL”), its wholly owned Singaporean subsidiary, Mitcham Marine Leasing Pte. Ltd. (“MML”), and its branch operations in Colombia, provides full-service equipment leasing, sales and service to the seismic industry worldwide. All intercompany transactions and balances have been eliminated in consolidation. |
Basis of Presentation | Basis of Presentation The condensed consolidated balance sheet as of January 31, 2018 for the Company has been derived from audited consolidated financial statements. The unaudited interim condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2018. In the opinion of the Company’s management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of July 31, 2018, the results of operations for the three and six months ended July 31, 2018 and 2017, and the cash flows for the six months ended July 31, 2018 and 2017, have been included in these condensed consolidated financial statements. The foregoing interim results are not necessarily indicative of the results of operations to be expected for the full fiscal year ending January 31, 2019. |
New Accounting Pronouncements | New Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, to simplify impairment testing of goodwill and other intangible assets by eliminating step two of the impairment test. The Company has adopted the provisions of ASU 2017-04 as of January 31, 2018. The adoption of ASU 2017-04 did not have a material effect on the Company's condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The Company has adopted the provisions of ASU No. 2016-15 as of February 1, 2018. The adoption of ASU No. 2016-15 did not have a material effect on the Company’s condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. More specifically, the new guidance requires a lessee to recognize assets and liabilities for leases with terms of more than 12 months. ASU No. 2016-02 will be effective during the Company’s fiscal year ended January 31, 2020. Management has not yet completed its assessment of the impact of the new guidance. However, based on a preliminary review, the Company does not expect the adoption of ASU No. 2016-02 to have a material impact on its financial statements. The Company is continuing its assessment, which may identify additional impacts the adoption of ASU No. 2016-02 will have on its consolidated financial statements and disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 was later amended by ASU No. 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients . ASU 2014-09, as amended, (the “New Revenue Standard”) supersedes most industry specific guidance and intends to enhance comparability of revenue recognition practices across entities and industries by providing a principle-based, comprehensive framework for addressing revenue recognition issues. The Company adopted the New Revenue Standard as of February 1, 2018 using the modified retrospective method. The adoption of the New Revenue Standard did not have a material impact on the Company’s consolidated financial statements. |
Revenue from Contracts with Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table presents revenue from contracts with customers disaggregated by geography, based on shipping location of our customers (in thousands):
The following table presents revenue from contracts with customers disaggregated by product line and timing of revenue recognition (in thousands):
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Contract with Customer, Asset and Liability | As of July 31, 2018 contract assets and liabilities consisted of the following (in thousands):
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Acquisition of Assets (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | Details of the purchase price and the allocation of the purchase price to the assets acquired are as follows (in thousands):
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Balance Sheet (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and Contracts Receivables |
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Schedule of Inventories |
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Schedule of Seismic Equipment Lease Pool and Property and Equipment |
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets |
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Future Estimated Amortization Expense Related to Amortizable Intangible Assets | As of July 31, 2018, future estimated amortization expense related to amortizable intangible assets was estimated to be:
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Earnings per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Weighted Average Common Shares Used in Earnings Per Share Calculation | The following table presents the calculation of basic and diluted weighted average common shares used in the earnings per share calculation:
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Segment Reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Assets from Segment to Consolidated | Financial information by business segment is set forth below (net of any allocations):
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Reconciliation of Revenue from Segment to Consolidated | Results for the three months ended July 31, 2018 and 2017 were as follows (in thousands):
Results for the six months ended July 31, 2018 and 2017 were as follows (in thousands):
|
Revenue from Contracts with Customers - Revenue Disaggregated by Geography (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jul. 31, 2018 |
Jul. 31, 2018 |
|
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | $ 6,012 | $ 9,720 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 1,124 | 1,252 |
Europe, Russia & CIS | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 2,747 | 4,766 |
Middle East & Africa | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 122 | 636 |
Asia-Pacific | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | 1,979 | 2,679 |
Canada & Latin America | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue from contracts with customers | $ 40 | $ 387 |
Revenue from Contracts with Customers - Contract Assets And Liabilities (Detail) $ in Thousands |
6 Months Ended |
---|---|
Jul. 31, 2018
USD ($)
| |
Contract Assets: | |
Unbilled revenue-current | $ 341 |
Unbilled revenue - non-current | 0 |
Total unbilled revenue | 341 |
Contract Liabilities: | |
Deferred revenue & customer deposits - current | 934 |
Deferred revenue & customer deposits - non-current | 8 |
Total deferred revenue & customer deposits | $ 942 |
Minimum | |
Contract With Customers [Line Items] | |
Contract with customers, turn over period | 3 months |
Maximum | |
Contract With Customers [Line Items] | |
Contract with customers, turn over period | 6 months |
Acquisition of Assets (Detail) $ in Thousands |
1 Months Ended |
---|---|
Feb. 28, 2018
USD ($)
shares
| |
Preferred Stock | |
Allocation of purchase price: | |
Stock issued during period (in shares) | shares | 152,290 |
Value of shares issued | $ 3,500 |
Hydroscience | |
Purchase Price: | |
Cash | 3,000 |
Release of claims against Hydroscience | 1,144 |
Transaction costs | 312 |
Total purchase price | 4,456 |
Allocation of purchase price: | |
Inventory | 206 |
Tangible assets (mainly manufacturing equipment) | 350 |
Intangible assets (including patents, designs & software) | 3,900 |
Total purchase price | $ 4,456 |
Balance Sheet - Accounts and Contracts Receivables (Detail) - USD ($) $ in Thousands |
Jul. 31, 2018 |
Jan. 31, 2018 |
---|---|---|
Receivables: | ||
Accounts receivable | $ 11,490 | $ 16,392 |
Contracts receivable | 3,823 | 4,921 |
Total receivables | 15,313 | 21,313 |
Less long-term portion | (700) | (6,934) |
Current accounts and contracts receivable | 14,613 | 14,379 |
Less current portion of allowance for doubtful accounts | (3,115) | (3,885) |
Current portion of accounts and contracts receivable, net of allowance for doubtful accounts | $ 11,498 | $ 10,494 |
Balance Sheet - Additional Information (Detail) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jul. 31, 2018
USD ($)
customer
|
Jan. 31, 2018
USD ($)
customer
|
|
Balance Sheet [Line Items] | ||
Contracts receivable | $ 3,823,000 | $ 4,921,000 |
Number of customers due | customer | 4 | 4 |
Contracts receivable, interest rate | 2.70% | 2.20% |
Impairment of long-lived assets | $ 0 | |
Minimum | ||
Balance Sheet [Line Items] | ||
Contracts receivable repayment term | 1 month | |
Maximum | ||
Balance Sheet [Line Items] | ||
Contracts receivable repayment term | 40 months |
Balance Sheet - Schedule of Inventories (Detail) - USD ($) $ in Thousands |
Jul. 31, 2018 |
Jan. 31, 2018 |
---|---|---|
Inventories: | ||
Raw materials | $ 4,842 | $ 5,099 |
Finished goods | 6,138 | 6,185 |
Work in progress | 1,929 | 1,247 |
Cost of inventories | 12,909 | 12,531 |
Less allowance for obsolescence | (1,054) | (1,675) |
Total inventories, net | $ 11,855 | $ 10,856 |
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jan. 31, 2018 |
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment | $ 1,500,000 | ||
Additional impairment charges | $ 0 | ||
Aggregate amortization expense | $ 889,000 | $ 716,000 | |
Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 5 years | ||
Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life of intangible assets | 15 years |
Goodwill and Other Intangible Assets - Future Estimated Amortization Expense Related to Amortizable Intangible Assets (Detail) - USD ($) $ in Thousands |
Jul. 31, 2018 |
Jan. 31, 2018 |
---|---|---|
For fiscal years ending January 31 (in thousands): | ||
2019 | $ 902 | |
2020 | 1,783 | |
2021 | 1,636 | |
2022 | 1,150 | |
2023 | 964 | |
2024 and thereafter | 4,602 | |
Net Carrying Amount | $ 11,037 | $ 8,015 |
Income Taxes - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
Jul. 31, 2018 |
Jul. 31, 2017 |
Jan. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||||
Provision for income taxes | $ 85,000 | $ 357,000 | $ 522,000 | $ 586,000 | |
Pre-tax net loss | 4,504,000 | 5,007,000 | $ 9,972,000 | $ 7,443,000 | |
Effective tax rate | (5.20%) | (7.90%) | |||
Non-current prepaid income taxes | 1,570,000 | $ 1,570,000 | $ 1,609,000 | ||
Unrecognized tax benefit | $ 0 | $ 0 | $ 0 | $ 0 |
Earnings per Share - Basic and Diluted Weighted Average Common Shares Used in Earnings Per Share Calculation (Detail) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Earnings Per Share [Abstract] | ||||
Basic weighted average common shares outstanding | 12,093 | 12,082 | 12,090 | 12,080 |
Stock options | 84 | 83 | 63 | 104 |
Unvested restricted stock | 3 | 35 | 15 | 37 |
Total weighted average common share equivalents | 87 | 118 | 78 | 141 |
Diluted weighted average common shares outstanding | 12,180 | 12,200 | 12,168 | 12,221 |
Equity and Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2018 |
Jul. 31, 2017 |
Jul. 31, 2018 |
Jul. 31, 2017 |
|
Equity [Abstract] | ||||
Quarterly dividends declared (in usd per share) | $ 0.5625 | |||
Compensation expense related to stock-based awards granted | $ 242 | $ 237 | $ 368 | $ 461 |
Subsequent Events (Details) $ in Millions |
1 Months Ended |
---|---|
Aug. 31, 2018
USD ($)
| |
Subsequent event | |
Subsequent Event [Line Items] | |
Proceeds from sale of subsidiary | $ 1.0 |
Segment Reporting - Financial Information by Business Segment (Assets) (Detail) - USD ($) $ in Thousands |
Jul. 31, 2018 |
Jan. 31, 2018 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total Assets | $ 68,114 | $ 73,679 |
Operating Segments | Marine Technology Products | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 43,228 | 35,879 |
Operating Segments | Equipment Leasing | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 24,918 | 37,850 |
Eliminations | ||
Segment Reporting Information [Line Items] | ||
Total Assets | $ (32) | $ (50) |
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