Mitcham Industries, Inc. (NASDAQ:MIND) announced financial results for its fiscal 2009 fourth quarter and year ended January 31, 2009.
The company reported total revenues of $16.2m for the fourth quarter of fiscal 2009 compared to $20.8m in the fourth quarter of fiscal 2008. Net income for the fourth quarter of fiscal 2009 was $421,000, or $0.04 per diluted share, compared to net income of $3.3m, or $0.32 per diluted share, for the fourth quarter of fiscal 2008. Fourth quarter earnings were impacted by a $2.4m charge to the company's provision for doubtful accounts and a gain of $580,000 resulting from an insurance settlement on equipment destroyed during Hurricane Ike. Absent these two items, fourth quarter 2009 net income was approximately $1.6m, or $0.16 per diluted share. The $2.4m bad debt provision was taken in light of the global economic and financial crisis, which could impact certain customers' ability to pay. Total revenues for fiscal 2009 were $66.8m compared to $76.4m in fiscal 2008. Net income for fiscal 2009 was $9.1m, or $0.89 per diluted share, compared to $11.4m, or $1.11 per diluted share, in fiscal 2008.
Bill Mitcham, the company's President and CEO, stated, "The decline in commodity prices driven by the global economic recession, along with the almost total shut-down of the credit markets, has clearly impacted the demand for our equipment and services, especially in Canada and Russia. We did not see the pick-up in business in these regions that we had anticipated earlier in the year and that we normally see during the winter months.
"Given this difficult financial environment, we considered it prudent to make provision for possible collection problems from customers. Had it not been for this charge in the fourth quarter, our results would have been within the range of guidance we provided in early December 2008. Nonetheless, we are disappointed with the way fiscal 2009 ended as we had anticipated a strong fourth quarter.
"Despite these challenges, there are some bright spots in our business. Seamap sales were strong in the fourth quarter, and the marine side of our business remains relatively stable. For fiscal 2009 our core equipment leasing revenues increased approximately 10 percent over last fiscal year. In addition, due to strong customer demand during most of fiscal 2009, we acquired $34.9m of new lease pool equipment during the year. These additions include 4,000 stations (12,000 channels) of three-component digital sensors, newly deployed borehole tools for frac monitoring and vertical seismic profiling and ultra light submersible equipment for use in transition zone areas around the world. These additions have helped us diversify and strengthen our world-wide market presence.
"Looking at fiscal 2010, we expect to see continued weakness in both North America and the CIS. However, we do anticipate continued brisk activity in South America and Asia, including Australia and Indonesia; and there are possibilities for some very high channel count jobs elsewhere in the world during the coming year. We also expect a relatively stable marine environment. As such, we remain on schedule to begin initial deliveries of our $11m Polarcus project in the second quarter with the balance to be delivered during fiscal 2010. Seamap is providing Polarcus with its GunLink 4000 fully distributed digital gun controller systems and BuoyLink RGPS tail buoy positioning systems. With these orders, Seamap appears to be well positioned going into fiscal 2010.
"Although we typically provide financial guidance for the current fiscal year as part of our fourth quarter earnings release, the current uncertainty surrounding the duration and the severity of this global economic recession makes it difficult at this point to provide any kind of earnings guidance with a high level of confidence. We anticipate that our capital expenditure program is likely to be cut from $34.9m in fiscal 2009 to less than $10m in fiscal 2010. Despite the current market conditions, we do see opportunities that justify adding specific types of equipment to our lease pool.
"While this is an extremely difficult environment, we believe Mitcham is particularly well positioned to manage the challenges facing us. Even at reduced operating levels, we expect to generate strong cash flow as depreciation is by far our largest fixed cost. We have a strong balance sheet with modest debt; we also believe that we have access to a sufficient amount of additional credit and liquidity, should the need arise. All of these things work together to position us, we believe, to deal with the uncertainties ahead and to take advantage of the opportunities that will inevitably arise in this market."
Total revenues for the fourth quarter of fiscal 2009 were $16.2m compared to $20.8m for the fourth quarter of fiscal 2008, roughly a 22 percent decline. Core revenues from equipment leasing, excluding equipment sales, declined to $7.8m from $9.6m in the same period a year ago. This decrease in leasing revenues was driven by the reduced level of seismic activity, especially late in the quarter, which created lower demand for seismic equipment in both domestic and international markets as compared to a year ago.
Sales of new seismic, hydrographic and oceanographic equipment were $2.2m compared to $6.9m in the comparable period a year ago, reflecting the decline in demand for new seismic equipment. Sales of new seismic, hydrographic and oceanographic equipment also benefited from a very strong seismic environment in the fourth quarter of fiscal 2008. Sales of lease pool equipment were $247,000 in the fiscal 2009 fourth quarter compared to $335,000 in the fourth quarter of fiscal 2008.
Seamap equipment sales in the fourth quarter increased 52 percent to $6m from $3.9m in the comparable period a year ago, essentially driven by demand from marine customers for the GunLink and BuoyLink product lines.
Total gross profit in the fourth quarter was $6.6m compared to $9.9m in the fourth quarter of fiscal 2008, a 33 percent decline. Gross profit margin was 41 percent in this year's fourth quarter compared to 47 percent a year ago. Gross profit margin in the fourth quarter was negatively impacted by the decline in leasing revenues and by a 32 percent increase in lease pool depreciation, reflecting the company's capital investment during fiscal 2008 and 2009. General and administrative costs for the fourth quarter declined 10 percent to $4.4m from $4.9m in the fourth quarter a year ago. During the fourth quarter, the Company recorded a provision for doubtful accounts of $2.4m as a result of the potential negative impact of the current credit markets on customers. Also in the fourth quarter of fiscal 2009, the Company recorded a gain of $580,000 resulting from an insurance settlement arising from the destruction of certain equipment during Hurricane Ike.
Operating income for the fourth quarter of fiscal 2009 declined to $144,000 compared to $4.3m in the comparable period a year ago primarily due to lower leasing revenues, higher lease pool depreciation and higher bad debt reserves. Net income for the fourth quarter was $421,000, or $0.04 per diluted share, compared to $3.3m, or $0.32 per diluted share, in the fourth quarter of fiscal 2008.
EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter was $4.7m, or 29 percent of total revenues, compared to $7.6m, or 37 percent of total revenues, in the same period last year. EBITDA, which is not a measure determined in accordance with generally accepted accounting principles ("GAAP"), is defined and reconciled to reported net income in Note A under the accompanying financial tables.
Total revenues for fiscal 2009 declined approximately 12 percent to $66.8m from $76.4m in fiscal 2008. However, core revenues from equipment leasing, excluding equipment sales, increased nearly 10 percent to $37.7m from $34.4m in the same period a year ago. Sales of new seismic, hydrographic and oceanographic equipment during fiscal 2009 declined to $9.2m from $13.8m a year ago. Sales of lease pool equipment were $3m compared to $3.5m a year ago. Seamap equipment sales for fiscal 2009 were $16.9m compared to $24.7m in fiscal 2008.
Total gross profit during fiscal 2009 was $32.6m compared to $35.8m in fiscal 2008. However, gross profit margin increased to 49 percent in this fiscal year from 47 percent a year ago, despite a 44 percent increase in lease pool depreciation during fiscal 2009.
Operating income for fiscal 2009 was $11.5m compared to $16.4m in fiscal 2008. Net income in 2009 was $9.1m, or $0.89 per diluted share, compared to $11.4m, or $1.11 per diluted share, a year ago. Net income in fiscal 2009 also included the tax benefit from the elimination of uncertain tax positions. EBITDA (earnings before interest, taxes, depreciation and amortization) for fiscal 2009 was $28.3m, or 42 percent of total revenues, compared to $28.3m, or 37 percent of total revenues, in fiscal 2008.