HOUSTON, May 04, 2017 (GLOBE NEWSWIRE) -- SAExploration Holdings, Inc. (NASDAQ:SAEX) (OTCQB:SXPLW) today announced its consolidated financial results for the first quarter (“Q1”) ended March 31, 2017.
First Quarter 2017 Summary
- Revenue of $86.2 million, compared to $90.2 million in Q1 2016
- Gross profit of $25.1 million, or 29.2% of revenues, compared to $26.4 million, or 29.3% of revenues, in Q1 2016
- Adjusted gross profit, a non-GAAP measure, of $28.4 million, or 33.0% of revenues, compared to $30.6 million, or 34.0% of revenues, in Q1 2016
- Net income attributable to the Corporation of $6.8 million, compared to $14.2 million in Q1 2016
- Operating cash flow of $5.4 million, compared to $(2.0) million in Q1 2016
- Adjusted EBITDA, a non-GAAP measure, of $22.7 million, or 26.4% of revenues, compared to $24.1 million, or 26.7% of revenues, in Q1 2016
- Contracted backlog of $53.1 million through 2017, which includes the recently announced $20.0 million of project awards, and $155.0 million of bids outstanding as of March 31, 2017
- Signed three-year agreement with Hocol S.A. to provide geophysical services in Colombia
Jeff Hastings, Chairman and CEO of SAE, commented, “We are very pleased with the performance and results we produced during the first quarter, specifically with our ability to maintain the excellent level of execution and efficiency demonstrated in the first quarters of 2016 and 2015. Activity in the first quarter held firm, supported by a seasonal project on the North Slope of Alaska, and the successful execution of a major deep water ocean-bottom nodal project in West Africa. This was done in the face of continued pressure throughout the industry and all of our geographic markets, as producers remain patient and diligent in their evaluation of capital spending plans.”
Mr. Hastings continued, “We continue to engage in discussions with customers about longer term agreements, as evidenced by the signing of our three-year agreement with Hocol to provide all of their geophysical services in Colombia. We expect the Hocol agreement to add incremental revenue potential of about $40 million a year on a normalized annual basis through maturity. Because of our constrained visibility, however, our formal bids outstanding are relatively low. This is not necessarily reflective of the overall level of activity, but instead, is due mostly to timing and the lack of producers’ willingness to plan projects as far in advance as we’ve become accustomed to in the past. Conversely, early stage, pre-bid opportunities that we see coming into our markets, but that haven’t officially been tendered yet, suggest that future prospects may be brighter.”
Mr. Hastings concluded, “We remain well positioned internationally in key markets around the world. We continue to believe in our overall strategy and the fundamental elements that underpin our strength. Our core markets have proven resilient and our diversification has assisted us in maintaining stability. We expect to remain focused on preserving liquidity, including continuing with our efforts to monetize our Alaskan tax credits and to renew or replace our revolving credit facility and senior loan facility, while we await a recovery in exploration spending. In the meantime, our capital expenditures will be kept at a minimum, with a target of less than $5 million for 2017.”
First Quarter 2017 Financial Results
Revenues decreased 4.4% to $86.2 million from $90.2 million in Q1 2016, primarily due to a decrease in activity in Alaska, offset by an increase in ocean-bottom marine activity in West Africa when compared to the same period last year. However, total revenues in Q1 2016 included approximately $38.6 million related to tax credit projects in Alaska, when there were no such projects in Q1 2017.
Gross profit was $25.1 million, or 29.2% of revenues, compared to $26.4 million, or 29.3% of revenues, in Q1 2016. Gross profit for Q1 2017 and Q1 2016 included depreciation expense of $3.3 million and $4.2 million, respectively. Gross profit excluding depreciation expense, or adjusted gross profit, which is defined and calculated below, for Q1 2017 was $28.4 million, or 33.0% of revenues, compared to $30.6 million, or 34.0% of revenues, in Q1 2016. Despite a marginal decrease in revenue, gross profit, as a percentage of revenue, remained comparable to Q1 2016 due to sustained levels of performance and efficiencies at the field level.
Selling, general and administrative (“SG&A”) expenses during the quarter were $6.5 million, or 7.6% of revenues, compared to $6.7 million, or 7.5% of revenues, in Q1 2016. The decrease in SG&A expenses was primarily due to lower revenue in Q1 2017 compared to the same period last year. However, this was partially offset by an increase in non-cash share-based compensation expense in Q1 2017 and a gain on sale of fixed assets in Q1 2016. During Q1 2017 and Q1 2016, there were approximately $0.9 million and $0.2 million, respectively, of non-recurring or non-cash expenses included in SG&A.
Income before income taxes was $10.6 million during the quarter, compared to $17.3 million in Q1 2016. The decrease in income before income taxes was largely due to significantly higher other expense compared to Q1 2016. During Q1 2017, other expense included, among other items, $8.4 million of interest expense, of which, approximately $5.3 million was non-cash amortization of loan issuance costs and $2.2 million was interest that was paid in-kind. While a non-cash charge, the amortization of loan issuance costs is expected to continue to impact income before income taxes to a similar degree until the senior loan facility is repaid in full or matures in January 2018.
Provision for income taxes was $1.7 million, compared to $0.7 million in Q1 2016. The increase in provision for income taxes was primarily due to fluctuations in earnings among the various jurisdictions in which the company operates, decreases in valuation allowance reversals and increases in foreign tax rate differentials, offset by decreases in permanent differences.
Net income attributable to the Corporation for the quarter was $6.8 million, or $0.73 per diluted share, compared to $14.2 million, or $110.08 per diluted share, on a reverse split-adjusted basis, in Q1 2016. Net income was impacted by a number of factors during Q1 2017, including:
- Lower revenue and corresponding decrease in gross profit;
- Higher interest expense due to the amortization of loan issuance costs for the senior loan facility; and
- Higher effective tax rate.
Adjusted EBITDA, which is defined and calculated below, was $22.7 million during the quarter, or 26.4% of revenues, compared to $24.1 million, or 26.7% of revenues, in Q1 2016.
Capital expenditures for the quarter were $2.2 million, compared to $0.2 million in Q1 2016. The capital expenditures in Q1 2017 primarily related to the remaining cash payments for the purchase of additional vibrator trucks made in Q4 2016, and were partially offset by the receipt of $1.9 million in proceeds from the sale of fixed assets in Q4 2016. Given the state of the industry and the limited growth opportunities requiring capital expenditures, the Company expects its total capital expenditures for 2017 to be under $5.0 million.
On March 31, 2017, cash, cash equivalents and restricted cash totaled $15.7 million, which included $4.2 million of restricted cash that was primarily related to exchange control regulations in a West African country where SAE completed a deep water ocean-bottom marine project during Q1 2017. Also on March 31, 2017, working capital was $44.8 million, total debt at face value, excluding net unamortized premiums or discounts, was $118.8 million, and total stockholders’ equity was $47.5 million.
As of March 31, 2017, SAE’s backlog was $53.1 million. Bids outstanding on the same date totaled $155.0 million. The entire backlog was comprised of land-based projects, with 89% in South America, 8% in North America and the remainder in Southeast Asia.
SAE currently expects all of the projects in its backlog to be completed during 2017. The estimations of realization from the backlog can be impacted by a number of factors, however, including deteriorating industry conditions, customer delays or cancellations, permitting or project delays and environmental conditions.
Investor Conference Call
SAE will host a conference call on Friday, May 5, 2017 at 10:00 a.m. Eastern Time to discuss its consolidated financial results for the first quarter ended March 31, 2017. Participants can access the conference call by dialing (855) 433-0934 (toll-free) or (484) 756-4291 (international). SAE will also offer a live webcast of the conference call on the Investors section of its website at www.saexploration.com.
To listen live via the company’s website, please go to the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. A replay of the webcast for the conference call will be archived on the company’s website and can be accessed by visiting the Investors section of SAE’s website.
About SAExploration Holdings, Inc.
SAE is an internationally-focused oilfield services company offering a full range of vertically-integrated seismic data acquisition and logistical support services in remote and complex environments throughout Alaska, Canada, South America, Southeast Asia and West Africa. In addition to the acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data on land, in transition zones and offshore in depths reaching 3,000 meters, SAE offers a full suite of logistical support and in-field data processing services, such as program design, planning and permitting, camp services and infrastructure, surveying, drilling, environmental assessment and reclamation and community relations. SAE operates crews around the world, performing major projects for its blue-chip customer base, which includes major integrated oil companies, national oil companies and large independent oil and gas exploration companies. Operations are supported through a multi-national presence in Houston, Alaska, Canada, Peru, Colombia, Bolivia, Brazil and New Zealand. For more information, please visit SAE’s website at www.saexploration.com.
The information in SAE’s website is not, and shall not be deemed to be, a part of this notice or incorporated in filings SAE makes with the Securities and Exchange Commission.
Forward Looking Statements
This press release contains certain "forward-looking statements" within the meaning of the U.S. federal securities laws with respect to SAE. These statements can be identified by the use of words or phrases such as “expects,” “estimates,” “projects,” “budgets,” “forecasts,” “anticipates,” “intends,” “plans,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions. These forward-looking statements include statements regarding SAE's financial condition, results of operations and business and SAE's expectations or beliefs concerning future periods and possible future events. These statements are subject to significant known and unknown risks and uncertainties that could cause actual results to differ materially from those stated in, and implied by, this press release. Risks and uncertainties that could cause actual results to vary materially from SAE’s expectations are described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in SAE’s filings with the Securities and Exchange Commission. Except as required by applicable law, SAE is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.
|UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In thousands, except share and per share amounts)|
|Three Months Ended|
|Revenue from services||$||86,169||$||90,153|
|Costs of services excluding depreciation and amortization expense||57,774||59,511|
|Depreciation and amortization expense included in costs of services||3,251||4,199|
|Selling, general and administrative expenses||6,517||6,746|
|Income from operations||18,627||19,697|
|Other income (expense):|
|Interest expense, net||(8,358)||(4,028)|
|Foreign exchange gain, net||311||1,625|
|Other expense, net||(13)||(5)|
|Total other expense, net||(8,060)||(2,408)|
|Income before income taxes||10,567||17,289|
|Provision for income taxes||1,740||665|
|Less: net income attributable to non-controlling interest||1,982||2,384|
|Net income attributable to the Corporation||$||6,845||$||14,240|
|Basic and diluted earnings per share:|
|Weighted average basic shares outstanding||9,358,529||129,269|
|Earnings per share – basic||$||0.73||$||110.16|
|Weighted average diluted shares outstanding||9,391,022||129,356|
|Earnings per share – diluted||$||0.73||$||110.08|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(In thousands, except share and par value amounts)|
|March 31, |
|December 31, |
|Cash and cash equivalents||$||11,514||$||11,460|
|Accounts receivable, net of allowance for doubtful accounts of $12 at March 31, 2017 and December 31, 2016||96,167||69,721|
|Deferred costs on contracts||1,059||8,644|
|Deferred loan issuance costs, net||15,590||—|
|Total current assets||130,162||92,338|
|Property and equipment, net of accumulated depreciation of $65,085 and $61,444 at March 31, 2017 and December 31, 2016, respectively||41,206||42,759|
|Intangible assets, net of accumulated amortization of $659 and $635 at March 31, 2017 and December 31, 2016, respectively||703||721|
|Deferred loan issuance costs, net||—||20,856|
|Accounts receivable, noncurrent, net of allowance for doubtful accounts of $0 at March 31, 2017 and December 31, 2016||37,984||37,984|
|Deferred income tax assets||5,193||5,122|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Income and other taxes payable||13,388||15,605|
|Borrowings under revolving credit facility||4,517||5,844|
|Borrowings under senior loan facility||29,995||—|
|Current portion of capital leases||42||56|
|Total current liabilities||85,404||51,531|
|Borrowings under senior loan facility||—||29,995|
|Second lien notes, net of net unamortized premium of $87 and $96 at March 31, 2017 and December 31, 2016, respectively||82,433||80,238|
|Senior secured notes, net of unamortized deferred loan issuance costs of $38 and $42 at March 31, 2017 and December 31, 2016, respectively||1,834||1,830|
|Preferred stock, $0.0001 par value, 1,000,000 authorized shares and none outstanding||—||—|
|Common stock, $0.0001 par value, 55,000,000 shares authorized, and 9,358,529 issued and outstanding at March 31, 2017 and December 31, 2016||1||1|
|Additional paid-in capital||132,445||131,816|
|Accumulated other comprehensive loss||(4,887)||(4,822)|
|Total stockholders’ equity attributable to the Corporation||41,854||34,445|
|Total stockholders’ equity||47,452||38,061|
|Total liabilities and stockholders’ equity||$||217,123||$||201,655|
|UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME|
|Three Months Ended|
|Foreign currency translation loss||(65)||(613)|
|Total comprehensive income||8,762||16,011|
|Less: comprehensive income attributable to non-controlling interest||1,982||2,384|
|Total comprehensive income attributable to the Corporation||$||6,780||$||13,627|
|UNAUDITED CONSOLIDATED REVENUES BY REGION |
|Three Months Ended|
UNAUDITED RECONCILIATION OF NET INCOME TO NON-GAAP ADJUSTED EBITDA
We use an adjusted form of EBITDA to measure period over period performance, which is a non-GAAP measurement. Adjusted EBITDA is defined as net income (loss) plus depreciation and amortization, plus interest expense, plus income taxes, plus share-based compensation, plus loss (gain) on disposal of property and equipment, plus foreign exchange loss (gain), and plus non-recurring one-time expenses. Our management uses Adjusted EBITDA as a supplemental financial measure to assess: (i) the financial performance of our assets without regard to financing methods, capital structures, taxes, historical cost basis or non-recurring expenses; (ii) our liquidity and operating performance over time in relation to other companies that own similar assets and calculate Adjusted EBITDA in a similar manner; and (iii) the ability of our assets to generate cash sufficient to pay potential interest cost. We consider Adjusted EBITDA as presented below to be the primary measure of period-over-period changes in our operational cash flow performance.
The terms EBITDA and Adjusted EBITDA are not defined under GAAP, and we acknowledge that these are not measures of operating income, operating performance or liquidity presented in accordance with GAAP. When assessing our operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for net income, cash flow from operating activities or other cash flow data calculated in accordance with GAAP. In addition, our calculation of Adjusted EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA or similarly titled measures in the same manner. Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes.
The computation of our Adjusted EBITDA, a non-GAAP measure, from net income, the most directly comparable GAAP financial measure, is provided in the table below.
|Three Months Ended|
|Depreciation and amortization (1)||3,356||4,332|
|Interest expense, net||8,358||4,028|
|Provision for income taxes||1,740||665|
|Share-based compensation (2)||629||165|
|Loss (gain) on disposal of property and equipment, net (3)||4||(342)|
|Foreign exchange gain, net (4)||(311)||(1,625)|
|Non-recurring expenses (5)(6)||112||231|
|(1)||Additional depreciation and amortization expenses not related to the cost of services were incurred during the three months ended March 31, 2017 and 2016 in the amount of $105 and $133, respectively.|
|(2)||Share-based compensation primarily relates to the non-cash value of stock options and restricted stock awards granted to our employees and directors.|
|(3)||Loss (gain) on disposal of property and equipment, net is primarily the impact of sale of equipment.|
|(4)||Foreign exchange gain, net, includes the effect of both realized and unrealized foreign exchange transactions.|
|(5)||Non-recurring expenses in 2017 primarily consisted of severance payments in several locations as well as non-operating expenses incurred at the corporate location.|
|(6)||Non-recurring expenses in 2016 primarily consisted of various non-operating expenses incurred at the corporate and Peru locations.|
UNAUDITED RECONCILIATION OF GROSS PROFIT TO NON-GAAP ADJUSTED GROSS PROFIT
We use an adjusted form of gross profit to measure period over period performance, which is not derived in accordance with GAAP. Adjusted Gross Profit is defined as gross profit plus depreciation and amortization expense related to the cost of services. Our management uses Adjusted Gross Profit as a substantial financial measure to assess the cost management and performance of our projects. Within the seismic data services industry, gross profit is presented both with and without depreciation and amortization expense on equipment used in operations and, therefore, we also use this measure to assess our performance over time in relation to other companies that own similar assets and calculate gross profit in the same manner.
The term Adjusted Gross Profit is not defined under GAAP, and we acknowledge that it is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP. When assessing our operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for gross profit calculated in accordance with GAAP. In addition, our calculation of Adjusted Gross Profit may not be comparable to gross profit or similarly titled measures utilized by other companies since such other companies may not calculate adjusted gross profit in the same manner. Further, the results presented by Adjusted Gross Profit cannot be achieved without incurring the costs that the measure excludes.
The computation of our Adjusted Gross Profit, a non-GAAP measure, from gross profit, the most directly comparable GAAP financial measure, is provided in the table below:
|Three Months Ended|
|Gross profit as presented||$||25,144||$||26,443|
|Depreciation and amortization expense included in cost of services (1)||3,251||4,199|
|Adjusted Gross Profit||$||28,395||$||30,642|
|(1)||Depreciation and amortization expense included in cost of services includes depreciation and amortization on equipment used in operations.|
Contact SAExploration Holdings, Inc. Ryan Abney Vice President, Finance (281) 258-4409 firstname.lastname@example.org
Source:SAExploration Holdings, Inc.