Mitcham Industries Reports Fiscal 2014 Third Quarter Results

         Mitcham Industries Reports Fiscal 2014 Third Quarter Results

PR Newswire

HUNTSVILLE, Texas, Dec. 10, 2013

HUNTSVILLE, Texas, Dec. 10, 2013 /PRNewswire/ -- Mitcham Industries, Inc.
(NASDAQ: MIND) today announced financial results for its fiscal 2014 third
quarter ended October 31, 2013.

Total revenues for the third quarter of fiscal 2014 increased 9.2% to $20.3
million compared to $18.6 million in the third quarter of fiscal 2013.
Equipment leasing revenues, excluding equipment sales, were $7.9 million in
the third quarter compared to $11.1 million in the same period last year.
Seamap sales increased 23% to $5.5 million compared to $4.5 million in the
third quarter of fiscal 2013. The Company reported a net loss of $2.6
million, or $0.21 per share, for the third quarter of fiscal 2014 compared to
net loss of $1.2 million, or $0.10 per share, in the third quarter of fiscal
2013. Fiscal 2014 third quarter results include a charge of $1.0 million, or
approximately $0.07 per share after-tax, to the Company's provision for
doubtful accounts. Excluding the impact of this charge, the Company reported a
net loss of $1.7 million, or $0.14 per share, for the third quarter of fiscal
2014.

Bill Mitcham, President and CEO, stated, "As we anticipated, the overall
market softness that we have experienced since the beginning of this fiscal
year continued into the third quarter, resulting in lower year-over-year
leasing revenues primarily due to ongoing weakness in U.S. and Latin American
land seismic activity. We did see a sequential improvement in leasing
revenues over the second quarter of this year, primarily due to further
improvement in Europe and an increase in down hole tool leasing. Total
revenues in our Equipment Leasing segment, including equipment sales,
increased in the third quarter compared to the same period a year ago
primarily due to increased sales from our Australian subsidiary. Seamap's
results improved for the quarter compared to a year ago, despite no major
system deliveries in the quarter. We had expected to deliver one GunLink 4000
system in the quarter, but due to issues with vessel availability, our
customer delayed the delivery to a subsequent period.

"Looking at the balance of the year and into early fiscal 2015, we expect our
equipment leasing business to improve, partially due to seasonality with the
start of the winter seasons in Russia and Canada. While the Russian winter
season is expected to be somewhat stronger than last year, the Canadian winter
season appears generally weaker than last year. However, we have recently
deployed newly acquired equipment for specific projects that we believe will
positively impact our Canadian results over the next couple of quarters. In
the Pacific Rim, we anticipate taking advantage of new projects that are
scheduled to begin in the current quarter, particularly in Australia. We are
finally experiencing meaningful improvement in Latin America, with new
projects having started and others scheduled to start, as well as renewed
opportunities in the region. Down hole activity continues to strengthen, and
marine leasing seems to have bottomed and is slowly improving. We believe
Seamap will have a stronger fourth quarter due to scheduled deliveries of new
systems, including at least one GunLink 4000 system.

"Over the past several quarters, we have experienced a slowdown in the seismic
industry as oil and gas companies have shifted their capital spending more
towards production and less to exploration, a trend that appears to be
continuing. However, we are not simply waiting for the markets to recover.
Due to new opportunities and customer demand, we have recently made
significant additions to our lease pool, specifically in wireless land
equipment. We are taking advantage of the continued industry trend towards
wireless land recording systems in certain geographic areas. We have purchased
this equipment in response to specific demand, but we believe it will also
allow us to pursue other opportunities with new and existing customers.

"Looking into next year, the outlook for land activity in many regions such as
Europe, the U.S. and Latin America is encouraging, yet uncertain. The
long-term outlook for marine seismic continues to be attractive, given the
announced new vessels and upgrades, although many marine contractors are
facing near-term pricing pressure from their customers. During this period of
relative uncertainty, we have worked diligently to position ourselves to make
the most of an anticipated recovery in the seismic data acquisition industry
with our broad range of equipment, geographic diversity and focus on customer
service. In addition, we continue to maintain a strong financial position to
support our leadership position in our markets." 

FISCAL 2014 THIRD QUARTER RESULTS
Total revenues for the third quarter of fiscal 2014 were $20.3 million
compared to $18.6 million a year ago. A significant portion of our revenues
are typically generated from geographic areas outside the United States, and
during the third quarter of fiscal 2014, the percentage of revenues from
international customers was approximately 83% compared to 81% in the third
quarter of fiscal 2013.

Equipment leasing revenues, excluding equipment sales, were $7.9 million
compared to $11.1 million in the same period a year ago. The year-over-year
decline in third quarter equipment leasing revenues was largely due to
continued softness in land leasing activity in the United States and Latin
America, partially offset by improved leasing revenues in Europe and the
Pacific Rim as well as an increase in down hole tool leasing.

Lease pool equipment sales were $3.2 million for the third quarter of fiscal
2014 compared to $1.9 million in the third quarter a year ago. Sales of new
seismic, hydrographic and oceanographic equipment were $3.7 million compared
to $1.1 million in the third quarter a year ago, primarily attributable to
continued strong hydrographic and oceanographic equipment sales in the Pacific
Rim.

Seamap equipment sales for the third quarter of fiscal 2014 were $5.5 million
compared to $4.5 million in the same period a year ago. There were no large
system deliveries in the fiscal 2014 third quarter as an anticipated GunLink
4000 system was delayed due to vessel availability issues. In both the third
quarters of fiscal 2014 and 2013, Seamap revenues consisted solely of other
equipment sales and after-market business including replacement parts,
engineering services and ongoing support and repair services.

Lease pool depreciation expense in the third quarter of fiscal 2014 fell to
$7.2 million compared to $8.3 million in the same period a year ago due to
certain equipment becoming fully depreciated and the decline in lease pool
additions through the first nine months of fiscal 2014. Lease pool additions
in the first nine months of fiscal 2014 were approximately $14.3 million
compared to $26.5 million in the first nine months of fiscal 2013.

Gross profit in the third quarter of fiscal 2014 was $5.0 million compared to
$4.4 million in the third quarter a year ago. General and administrative
expenses were approximately $6.1 million in the third quarter of fiscal 2014
compared to $5.9 million for same period a year ago.

EBITDA (earnings before interest, taxes, depreciation and amortization) for
the third quarter of fiscal 2014 was $4.5 million, or 22% of revenues,
compared to $6.4 million, or 35% of revenues, in the same period last year.
EBITDA, which is not a measure determined in accordance with United States
generally accepted accounting principles ("GAAP"), is defined and reconciled
to reported net income and cash provided by operating activities, the most
comparable GAAP measures, in the accompanying financial tables.

FISCAL 2014 FIRST NINE MONTHS RESULTS
Total revenues for the first nine months of fiscal 2014 were $68.5 million
compared to $76.3 million for the first nine months of fiscal 2013. Equipment
leasing revenues, excluding equipment sales, were $34.4 million in the first
nine months of fiscal 2014 compared to $43.0 million in the same period a year
ago. Lease pool equipment sales in the first nine months of fiscal 2014 were
$6.2 million versus $7.4 million in the first nine months of fiscal 2013.
Sales of new seismic, hydrographic and oceanographic equipment for the nine
months of fiscal 2014 were $11.4 million compared to $3.6 million in the same
period of fiscal 2013. Seamap equipment sales for the first nine months of
fiscal 2014 were $16.4 million compared to $22.3 million in the same period of
last year.

Gross profit in the first nine months of fiscal 2014 was $23.9 million
compared to $28.6 million in the first nine months of fiscal 2013. Net income
for the first nine months of fiscal 2014 was $3.0 million, or $0.23 per
diluted share, compared to $13.6 million, or $1.03 per diluted share, for the
first nine months of fiscal 2013. EBITDA for the first nine months of fiscal
2014 was $27.0 million, or 39% of total revenues, compared to $36.5 million,
or 48% of total revenues, in the first nine months of fiscal 2013.

SHARE REPURCHASE PROGRAM
In April 2013, our Board of Directors authorized a share repurchase program
for up to 1.0 million shares of common stock through December 31, 2014.
During the fiscal 2014 third quarter, we repurchased 45,000 shares at an
average cost of approximately $14.91 per share. Through the first nine months
of fiscal 2014, we repurchased 147,900 shares of common stock at an average
cost of approximately $14.82 per share. These purchases were made in open
market transactions.

Future purchases may be made from time to time, based on market conditions,
legal requirements and other corporate considerations, in the open market or
otherwise on a discretionary basis. We expect to finance any repurchases from
a combination of cash on hand, cash provided by operating activities and
proceeds from our revolving credit facility.

CONFERENCE CALL
We have scheduled a conference call for Wednesday, December 11, 2013 at 9:00
a.m. Eastern Time to discuss our fiscal 2014 third quarter results. To access
the call, please dial (480) 629-9692 and ask for the Mitcham Industries call
at least 10minutes prior to the start time. Investors may also listen to the
conference live on the Mitcham Industries corporate website,
http://www.mitchamindustries.com, by logging onto the site and clicking
"Investors." A telephonic replay of the conference call will be available
through December 25, 2013 and may be accessed by calling (303) 590-3030 and
using passcode 4650592#. A web cast archive will also be available at
http://www.mitchamindustries.com shortly after the call and will be accessible
for approximately 90days. For more information, please contact Donna
Washburn at Dennard- Lascar Associates (713)529‑6600 or email
dwashburn@dennardlascar.com.

Mitcham Industries, Inc., a geophysical equipment supplier, offers for lease
or sale, new and "experienced" seismic equipment to the oil and gas industry,
seismic contractors, environmental agencies, government agencies and
universities. Headquartered in Texas, with sales and services offices in
Calgary, Canada; Brisbane, Australia; Singapore; Ufa, Bashkortostan, Russia;
Budapest, Hungary; Lima, Peru; Bogota, Colombia and the United Kingdom,
Mitcham conducts operations on a global scale and is the largest independent
exploration equipment lessor in the industry. Through its Seamap business,
Mitcham designs, manufactures and sells specialized seismic marine equipment.

Certain statements and information in this press release concerning results
for the quarter ended October 31, 2013 may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The words "believe," "expect," "anticipate," "plan," "intend,"
"should," "would," "could" or other similar expressions are intended to
identify forward-looking statements, which are generally not historical in
nature. These forward-looking statements are based on our current
expectations and beliefs concerning future developments and their potential
effect on us. While management believes that these forward-looking statements
are reasonable as and when made, there can be no assurance that future
developments affecting us will be those that we anticipate. All comments
concerning our expectations for future revenues and operating results are
based on our forecasts of our existing operations and do not include the
potential impact of any future acquisitions. Our forward-looking statements
involve significant risks and uncertainties (some of which are beyond our
control) and assumptions that could cause actual results to differ materially
from our historical experience and our present expectations or projections.

For additional information regarding known material factors that could cause
our actual results to differ from our projected results, please see our
filings with the SEC, including our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.

Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date hereof. We undertake no
obligation to publically update or revise any forward-looking statements after
the date they are made, whether as a result of new information, future events
or otherwise.



MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
                                            October 31, 2013  January 31, 2013
ASSETS
Current assets:
Cash and cash equivalents                   $24,209           $  15,150
Restricted cash                             710               801
Accounts receivable, net                    25,012            23,131
Current portion of contracts and notes      1,127             2,096
receivable
Inventories, net                            8,490             6,188
Prepaid income taxes                        1,975             5,591
Deferred tax asset                          1,976             1,842
Prepaid expenses and other current assets   4,232             3,079
 Total current assets                      67,731            57,878
Seismic equipment lease pool and property   106,631           119,608
and equipment, net
Intangible assets, net                      3,447             3,989
Goodwill                                   4,320             4,320
Deferred tax asset                          6,409             4,296
Other assets                                34                316
Total assets                                $ 188,572         $ 190,407
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                            $ 8,469          $  6,921
Current maturities – long-term debt         110               145
Deferred revenue                            497               539
Accrued expenses and other current          2,505             1,875
liabilities
 Total current liabilities                 11,581            9,480
Non-current income taxes payable            376               376
Long-term debt, net of current maturities   3,140             4,238
Total liabilities                           15,097            14,094
Shareholders' equity:
Preferred stock, $1.00 par value; 1,000
shares authorized; none issued and          -                 -
outstanding
Common stock, $0.01 par value; 20,000
shares authorized; 13,872 and 13,763       139               138
shares issued at October 31, 2013 and
January 31, 2013, respectively
Additional paid-in capital                 117,599           116,506
Treasury stock, at cost (1,075 and 926
shares at October 31, 2013 and January 31,  (7,075)           (4,860)
2013, respectively)
Retained earnings                           59,334            56,348
Accumulated other comprehensive income      3,478             8,181
Total shareholders' equity                  173,475           176,313
Total liabilities and shareholders' equity  $188,572          $ 190,407





MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                     For the Three Months  For the Nine Months
                                     Ended October 31,
                                                           Ended October 31,
                                     2013       2012       2013       2012
Revenues:
 Equipment leasing                  $7,900     $ 11,062   $34,435    $ 42,952
 Lease pool equipment sales         3,169      1,873      6,188      7,409
 Seamap equipment sales             5,537      4,495      16,422     22,301
 Other equipment sales              3,669      1,143      11,416     3,622
 Total revenues                   20,275     18,573     68,461     76,284
Cost of sales:
 Direct costs - equipment leasing   1,465      1,663      3,857      6,308
 Direct costs - lease pool          7,216      8,308      22,021     25,139
depreciation
 Cost of lease pool equipment sales 1,119      1,341      2,080      3,752
 Cost of Seamap and other equipment 5,522      2,907      16,653     12,445
sales
 Total cost of sales              15,322     14,219     44,611     47,644
Gross profit                         4,953      4,354      23,850     28,640
Operating expenses:
 General and administrative         6,086      5,854      18,173     16,907
 Provision for (recovery of)        1,048      -          1,048      (443)
doubtful accounts
 Depreciation and amortization      371        362        1,124      1,031
 Total operating expenses         7,505      6,216      20,345     17,495
Operating (loss) income              (2,552)    (1,862)    3,505      11,145
Other income (expenses):
 Interest, net                      (37)       79         120        (22)
 Other, net                         (517)      (395)      222        (964)
 Total other income (expenses)    (554)      (316)      342        (986)
(Loss) income before income taxes    (3,106)    (2,178)    3,847      10,159
Benefit (provision) for income taxes 478        956        (861)      3,477
Net (loss) income                    $ (2,628)  $ (1,222)  $ 2,986    $ 13,636
Net (loss) income per common share:
 Basic                              $ (0.21)   $ (0.10)   $ 0.23     $ 1.07
 Diluted                            $ (0.21)   $ (0.10)   $ 0.23     $ 1.03
Shares used in computing net income
per common share:
 Basic                              12,767     12,771     12,766     12,687
 Diluted                            12,767     12,771     13,180     13,264



MITCHAM INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                               For the Nine Months

                                               Ended October 31,
                                               2013           2012
Cash flows from operating activities:
Net income                                     $    2,986  $     13,636
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization                  23,242         26,270
Stock-based compensation                       839            1,323
Provision for doubtful accounts, net of        1,048          (636)
charge offs
Provision for inventory obsolescence           70             178
Gross profit from sale of lease pool           (4,108)        (3,657)
equipment
Excess tax benefit from exercise of
non-qualified stock options and restricted     (44)           (441)
shares
Deferred tax provision                         (2,495)        (3,524)
Changes in non-current income taxes payable    -              (5,003)
Changes in working capital items:
Accounts receivable                            (4,569)        17,662
Contracts and notes receivable                 1,277          (761)
Inventories                                    (2,827)        (623)
Prepaid expenses and other current assets      (1,449)        (1,341)
Income taxes receivable and payable            3,382          (7,672)
Prepaid foreign income tax                     -              3,519
Accounts payable, accrued expenses, other      1,338          (2,801)
current liabilities and deferred revenue
Net cash provided by operating activities      18,690         36,129
Cash flows from investing activities:
Purchases of seismic equipment held for lease  (13,308)       (35,531)
Purchases of property and equipment            (452)          (795)
Sale of used lease pool equipment              6,188          7,409
Net cash used in investing activities          (7,572)        (28,917)
Cash flows from financing activities:
Net payments on revolving line of credit       (1,000)        650
Proceeds from equipment notes                  -              180
Payments on borrowings                         (105)          (1,528)
Net purchases of short-term investments        30             -
Proceeds from issuance of common stock upon    275            331
exercise of options
Purchase of treasury stock                     (2,200)        -
Excess tax benefit from exercise of
non-qualified stock options and restricted     44             441
shares
Net cash (provided by) used in financing       (2,956)        74
activities
Effect of changes in foreign exchange rates    897            1,417
on cash and cash equivalents
Net change in cash and cash equivalents        9,059          8,703
Cash and cash equivalents, beginning of        15,150         15,287
period
Cash and cash equivalents, end of period       $   24,209   $    23,990





MITCHAM INDUSTRIES, INC.
Reconciliation of Net Income and Net Cash Provided by Operating Activities to
EBITDA
                         For the Three Months Ended  For the Nine Months Ended

                         October 31,                 October 31,
                         2013           2012         2013           2012
                         (in thousands)              (in thousands)
Reconciliation of Net
income to EBITDA and
Adjusted EBITDA
Net (loss) income        $ (2,628)     $ (1,222)   $ 2,986       $ 13,636
Interest (income)        37             (79)         (120)          22
expense, net
Depreciation and         7,618          8,703        23,242         26,270
amortization
(Benefit) provision for  (478)          (956)        861            (3,477)
income taxes
EBITDA (1)               4,549          6,446        26,969         36,451
Stock-based compensation 287            259          839            1,323
Adjusted EBITDA (1)      $ 4,836        $ 6,705      $ 27,808       $ 37,774
Reconciliation of Net
cash provided by
operating activities to
EBITDA
Net cash provided by     $ 2,729        $ 6,849      $ 18,690       $ 36,129
operating activities
Stock-based compensation (287)          (259)        (839)          (1,323)
Provision for doubtful  (1,048)        619          (1,048)        636
accounts
Changes in trade
accounts, contracts and  2,053          (6,029)      3,292          (16,901)
notes receivable
Interest paid            124            122          206            447
Taxes paid , net of      (3,699)        1,187        (74)           8,222
refunds
Gross profit from sale   2,050          532          4,108          3,657
of lease pool equipment
Changes in inventory     1,799          253          2,827          623
Changes in accounts
payable, accrued
expenses and other       886            758          (1,338)        2,801
current liabilities and
deferred revenue
Changes in prepaid
expenses and other       67             -            1,449          -
current assets
Other                    (125)          2,414        (304)          2,160
EBITDA (1)               $ 4,549        $ 6,446      $ 26,969       $ 36,451

    EBITDA is defined as net income before (a) interest expense, net of
    interest income, (b) provision for (or benefit from) income taxes and
    (c) depreciation, amortization and impairment. Adjusted EBITDA excludes
    stock-based compensation. We consider EBITDA and Adjusted EBITDA to be
    important indicators for the performance of our business, but not measures
    of performance calculated in accordance with accounting principles
    generally accepted in the United States of America ("GAAP"). We have
    included these non-GAAP financial measures because management utilizes
    this information for assessing our performance and liquidity and as
    indicators of our ability to make capital expenditures, service debt and
    finance working capital requirements. The covenants of the predecessor
    revolving credit agreement and our credit agreement each contain financial
    covenants that are based on EBITDA or Adjusted EBITDA. Management believes
    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
(1) 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 and liquidity 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
(unaudited)
                               For the Three Months Ended  For the Nine Months
                                                           Ended
                               October 31,
                                                           October 31,
                               2013           2012         2013       2012
                               (in thousands)              (in thousands)
Revenues:
Equipment Leasing              $ 14,738       $ 14,078     $ 52,039   $ 53,983
Seamap                         5,608          4,839        16,584     23,134
Inter-segment sales            (71)           (344)        (162)      (833)
 Total revenues             20,275         18,573       68,461     76,284
Cost of sales:
Equipment Leasing              12,784         12,177       36,946     38,193
Seamap                         2,651          2,052        7,962      10,065
Inter-segment costs            (113)          (10)         (297)      (614)
  Total cost of sales        15,322         14,219       44,611     47,644
Gross profit                   4,953          4,354        23,850     28,640
Operating expenses:
General and administrative     6,086          5,854        18,173     16,907
Provision for (recovery of)    1,048          -            1,048      (443)
doubtful accounts
Depreciation and amortization  371            362          1,124      1,031
 Total operating expenses   7,505          6,216        20,345     17,495
Operating (loss) income        $ (2,552)     $ (1,862)   $ 3,505    $ 11,145
Equipment Leasing Segment:
Revenue:
Equipment leasing              $ 7,900        $ 11,062     $ 34,435   $ 42,952
Lease pool equipment sales     3,169          1,873        6,188      7,409
New seismic equipment sales    294            181          569        619
SAP equipment sales            3,375          962          10,847     3,003
                               14,738         14,078       52,039     53,983
Cost of sales:
Direct costs-equipment leasing 1,466          1,664        3,857      6,546
Lease pool depreciation        7,279          8,314        22,188     25,276
Cost of lease pool equipment   1,119          1,341        2,080      3,752
sales
Cost of new seismic equipment  234            111          434        358
sales
Cost of SAP equipment sales    2,686          747          8,387      2,261
                               12,784         12,177       36,946     38,193
Gross profit                   $ 1,954       $  1,901    $ 15,093   $ 15,790
Gross profit %                 13%            14%          29%        29%
Seamap Segment:
Equipment sales                $ 5,608        $ 4,839      $ 16,584   $ 23,134
Cost of equipment sales        2,651          2,052        7,962      10,065
Gross profit                   $ 2,957        $ 2,787      $ 8,622    $ 13,069
Gross profit %                 53%            58%          52%        56%



Contacts: Billy F. Mitcham, Jr., President & CEO
          Mitcham Industries, Inc.
          936-291-2277
          Jack Lascar / Karen Roan
          Dennard- Lascar Associates
          713-529-6600

SOURCE Mitcham Industries, Inc.

Website: http://www.mitchamindustries.com
 
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