SAExploration Holdings, Inc. (NASDAQ: SAEX, OTCQB:
SXPLW) today announced its unaudited consolidated
financial results for the first quarter (“Q1”) ended March 31,
2019.
First Quarter 2019 Summary
- Revenue of $93.4 million, an increase of 151.6% from
$37.1 million in Q1 2018
- Gross profit of $20.3 million, or 21.8% of revenues, up
133.7% from $8.7 million, or 23.4% of revenues, in Q1
2018
- Adjusted gross profit, a non-GAAP measure, of $23.2
million, or 24.8% of revenues, up 108.6% from $11.1 million, or
29.9% of revenues, in Q1 2018
- Net income (loss) attributable to SAExploration of $3.8
million, or $0.50 basic income per share and $0.26 diluted income
per share, up from $(2.3) million, or $(92.06) basic and diluted
loss per share, in Q1 2018
- Adjusted EBITDA, a non-GAAP measure, of $15.9 million,
or 17.0% of revenues, an increase of 163.8% from $6.0 million, or
16.3% of revenues, in Q1 2018
- Contracted backlog of $183.9 million through Q1 2020
and $431.9 million of bids outstanding as of March 31,
2019
Jeff Hastings, Chairman and CEO of SAE,
commented, “Operational execution at a crew level, disciplined
strategy, sound decision making, and strong liquidity allowed us to
post one of the better first quarters in our recent history. As
expected, we have seen progressive growth in the ocean-bottom
marine market. And a return to activity on the North Slope in
Alaska this past winter season resulted in utilization levels not
seen in several years. Additionally, the business we have built in
the Lower 48 has diversified our customer base and introduced
additional opportunities to deploy our new equipment and capture
cost synergies through a reduction in rental expense. While we
continue to expect some continuing integration-related expenses
before our new overhead and fixed cost profiles normalize, we are
excited to see the positive impact from our acquisition of
Geokinetics’ assets last year. We are ahead of our own expectations
with respect to the timing of realizing the monetary benefits of
the difficult choices we’ve made over the past few years.”
Mr. Hastings continued, “The growth in our
contracted backlog and the rate at which we have been able to
replace the revenue generated from our backlog are encouraging
trends. We are seeing an improvement in activity levels primarily
in Alaska and ocean-bottom marine markets worldwide. Our recent $25
million ocean-bottom marine award in Brazil expands our geographic
footprint offshore to include Asia Pacific, the Middle East, West
Africa, the North Sea, and now South America. We continue to see a
positive imbalance in the marine market between the number of
producers allocating capital for new seismic expenditures, and the
number of service providers and equipment available to perform the
desired projects. In Alaska, much of the return to growth in
seismic activity has been driven by declining production rates and
the advancement of new recording technologies, which when combined
with higher channel count and higher density crew designs, have
resulted in superior imaging quality than what may exist currently
from pre-existing data. Additionally, due primarily to the
instability in commodity prices, in conjunction with a short
seasonal window to perform services, it appears that many of the
producers on the North Slope have conservatively replaced reserves
from existing production over the past few years. A similar effect
can be seen unfolding in international markets, where some areas
have not seen significant investment in many years. As we have
observed previously, we expect this unusually long period of
industry-wide underinvestment in new exploration initiatives,
together with access to enhanced recording technologies, to result
in a rush to replace depleting reserves globally.”
Mr. Hastings concluded, “I am very proud of all
SAE employees, who have spent the past couple of years making the
tough choices to position the Company for future success,
especially during a very difficult period when many service
providers were making decisions to boost near-term results at the
expense of longer-term objectives. Even with the inherent lumpiness
in our periodic revenue, we are optimistic that 2019 could be a
markedly improved year overall. We expect to see most of the large
working capital build related to the ramp up in activity we
experienced during the first quarter to return to our cash balance
by the end of the second quarter. This cash generation, combined
with the remaining $8 million of available borrowing capacity under
our senior credit facility, subject to lender approval, should be
sufficient to repay our $7 million principal amount of senior notes
due in September, plus cover working capital requirements for new
projects this year. While visibility into the second half of the
year is still constrained beyond the projects currently in backlog,
we are comfortable that our current liquidity and related near-term
expectations will be sufficient to continue to position SAE for
future success.”
First Quarter 2019 Financial
Results
SAE reported revenues of $93.4 million for the
first quarter of 2019, an increase of 264.9% from the fourth
quarter of 2018 and 151.6% from the first quarter of 2018.
The increase from both the fourth quarter of 2018 and the first
quarter of 2018 was due to more projects in North America and the
Asia Pacific region, partially offset by a decrease in activity in
South America.
SAE reported adjusted gross profit of $23.2
million for the first quarter of 2019, an increase of 1,643.5%
compared to $1.3 million in the fourth quarter of 2018 and an
increase of 108.6% compared to $11.1 million in the first quarter
of 2018. Adjusted EBITDA was $15.9 million for the first quarter of
2019, compared to $(8.0) million in the fourth quarter of 2018 and
$6.0 million for the first quarter of 2018. Both adjusted gross
profit and adjusted EBITDA in the first quarter of 2019 were
impacted by more favorable pricing and better than expected
performance compared to budget when taking into account the fixed
costs involved in SAE’s projects. Adjusted gross profit and
adjusted EBITDA are non-GAAP financial measures and are described
in the attached tables under “Non-GAAP
Measures.”
For the first quarter of 2019, SAE reported net
income attributable to SAExploration of $3.8 million, or $0.50
basic income per share and $0.26 diluted income per share, compared
to a net loss attributable to SAExploration of $22.6 million, or
$(7.75) basic and diluted loss per share for the fourth quarter of
2018. For the first quarter of 2018, SAE reported a net loss
attributable to SAExploration of $2.3 million, or $(92.06) basic
and diluted loss per share.
As of March 31, 2019, cash and cash equivalents
totaled $9.1 million, working capital was $19.4 million, total debt
at face value, excluding net unamortized premiums or discounts, was
$118.0 million, and total stockholders’ equity was $21.2
million.
Capital expenditures for the first quarter of
2019 were $0.3 million compared to $0.2 million and $0.1 million in
the fourth and first quarters of 2018, respectively. The low level
of capital expenditures in all periods was primarily due to the
continuation of unfavorable conditions in the oil and natural gas
industry.
As of March 31, 2019, SAE’s backlog was $183.9
million and bids outstanding totaled $431.9 million. Approximately
98% of the backlog is comprised of data acquisition projects and
the remainder is comprised of data processing projects. Of the data
acquisition projects, approximately 52% were onshore and 48% were
marine. Additionally, approximately 50% of the data acquisition
projects are located in North America and approximately 32% are
located in the Asia Pacific region, with the balance attributable
to projects in South America and the Middle East. SAE currently
expects to complete approximately 81% of the projects in its
backlog as of March 31, 2019 during the remainder of 2019, with the
balance scheduled to be performed during Q1 2020. The
estimations of realization from SAE’s 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 Tuesday, May
14, 2019 at 10:00 a.m. Eastern Time to discuss its unaudited
consolidated financial results for the first quarter ended March
31, 2019. Participants can access the conference call by dialing
(855) 433-0934 (toll-free) or (484) 756-4291 (toll). 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 international oilfield services
company offering a full range of vertically-integrated seismic data
acquisition, data processing and interpretation, and logistical
support services throughout North America, South America, Asia
Pacific, Africa and the Middle East. 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 data processing and interpretation
services utilizing its proprietary, patent-protected software, and
also provides in-house logistical support 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. With its
global headquarters in Houston, Texas, SAE supports its operations
through a multi-national presence in the United States, United
Kingdom, Canada, Peru, Colombia, Bolivia, Malaysia, Singapore, and
Australia. 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 per share amounts) |
|
|
Three Months EndedMarch 31, |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
Revenue from services |
$ |
93,393 |
|
|
$ |
37,123 |
|
Cost of services |
|
70,205 |
|
|
|
26,005 |
|
Depreciation and amortization
expense |
|
2,862 |
|
|
|
2,421 |
|
Gross profit |
|
20,326 |
|
|
|
8,697 |
|
Selling, general and
administrative expenses |
|
8,628 |
|
|
|
6,377 |
|
Operating income |
|
11,698 |
|
|
|
2,320 |
|
Other (expense) income,
net: |
|
|
|
|
|
|
|
Interest expense, net |
|
(3,497 |
) |
|
|
(3,141 |
) |
Foreign exchange gain (loss), net |
|
127 |
|
|
|
(174 |
) |
Other income, net |
|
13 |
|
|
|
145 |
|
Total other expense, net |
|
(3,357 |
) |
|
|
(3,170 |
) |
Income (loss) before income
taxes |
|
8,341 |
|
|
|
(850 |
) |
Income taxes |
|
3,118 |
|
|
|
624 |
|
Net income (loss) |
|
5,223 |
|
|
|
(1,474 |
) |
Less: net income attributable
to noncontrolling interest |
|
1,409 |
|
|
|
835 |
|
Net income (loss) attributable
to SAExploration |
$ |
3,814 |
|
|
$ |
(2,309 |
) |
Income (loss) per share
available to common stockholders of SAExploration: |
|
|
|
|
|
|
|
Basic |
$ |
0.50 |
|
|
$ |
(92.06 |
) |
Diluted |
$ |
0.26 |
|
|
$ |
(92.06 |
) |
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
3,689 |
|
|
|
535 |
|
Diluted |
|
14,129 |
|
|
|
535 |
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands, except share amounts) |
|
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
ASSETS |
(Unaudited) |
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
9,100 |
|
|
$ |
7,192 |
|
Restricted cash |
|
257 |
|
|
|
271 |
|
Accounts receivable, net |
|
71,490 |
|
|
|
24,859 |
|
Deferred costs on contracts |
|
5,273 |
|
|
|
3,717 |
|
Prepaid expenses and other current assets |
|
2,173 |
|
|
|
2,813 |
|
Total current assets |
|
88,293 |
|
|
|
38,852 |
|
|
|
|
|
|
|
|
|
Property and equipment, net of
accumulated depreciation of $84,617 and $81,904, respectively |
|
32,913 |
|
|
|
35,334 |
|
Operating lease right-of-use
assets |
|
9,000 |
|
|
|
— |
|
Goodwill |
|
1,722 |
|
|
|
1,687 |
|
Intangible assets, net of
accumulated amortization of $1,017 and $932, respectively |
|
3,993 |
|
|
|
4,066 |
|
Long-term accounts receivable,
net |
|
52,804 |
|
|
|
52,804 |
|
Deferred income taxes |
|
566 |
|
|
|
2,015 |
|
Other assets |
|
2,417 |
|
|
|
2,715 |
|
Total assets |
$ |
191,708 |
|
|
$ |
137,473 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
30,510 |
|
|
$ |
10,103 |
|
Accrued liabilities |
|
20,184 |
|
|
|
10,498 |
|
Income and other taxes payable |
|
5,398 |
|
|
|
3,331 |
|
Operating lease liabilities |
|
3,493 |
|
|
|
— |
|
Current portion of long-term debt |
|
7,866 |
|
|
|
7,837 |
|
Deferred revenue |
|
1,471 |
|
|
|
4,298 |
|
Total current liabilities |
|
68,922 |
|
|
|
36,067 |
|
|
|
|
|
|
|
|
|
Long-term debt, net |
|
95,701 |
|
|
|
85,653 |
|
Other long-term
liabilities |
|
5,902 |
|
|
|
380 |
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Common stock, 4,082,187 and 3,100,496 shares outstanding,
respectively |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
234,039 |
|
|
|
232,661 |
|
Accumulated deficit |
|
(212,798 |
) |
|
|
(216,612 |
) |
Accumulated other comprehensive loss |
|
(3,076 |
) |
|
|
(3,035 |
) |
Treasury stock, at cost, 111,670 and 111,245 shares,
respectively |
|
(1,866 |
) |
|
|
(1,866 |
) |
Total stockholders’ equity attributable to SAExploration |
|
16,299 |
|
|
|
11,148 |
|
Noncontrolling interest |
|
4,884 |
|
|
|
4,225 |
|
Total stockholders’ equity |
|
21,183 |
|
|
|
15,373 |
|
Total liabilities and
stockholders’ equity |
$ |
191,708 |
|
|
$ |
137,473 |
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS) |
(In thousands) |
|
|
Three Months EndedMarch 31, |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
5,223 |
|
|
$ |
(1,474 |
) |
Other comprehensive (loss)
income: |
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
(41 |
) |
|
|
588 |
|
Comprehensive income
(loss) |
|
5,182 |
|
|
|
(886 |
) |
Less: comprehensive income attributable to noncontrolling
interest |
|
1,409 |
|
|
|
835 |
|
Comprehensive income (loss)
attributable to SAExploration |
$ |
3,773 |
|
|
$ |
(1,721 |
) |
|
|
|
|
|
|
|
|
|
UNAUDITED REVENUE FROM SERVICES BY
REGION |
(In thousands) |
|
|
Three Months EndedMarch 31, |
|
2019 |
|
% |
|
2018 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
North America |
$ |
60,320 |
|
64.6 |
% |
|
$ |
27,679 |
|
74.6 |
% |
South America |
|
622 |
|
0.7 |
% |
|
|
9,444 |
|
25.4 |
% |
Asia Pacific |
|
32,451 |
|
34.7 |
% |
|
|
— |
|
— |
|
Total |
$ |
93,393 |
|
100.0 |
% |
|
$ |
37,123 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non–GAAP Measures
We define Adjusted EBITDA as net income (loss)
plus interest expense, net, income taxes, depreciation and
amortization expense, provision for doubtful accounts, non-cash
equity-based compensation, (gain) loss on disposal of property and
equipment, net, foreign exchange loss (gain), net, gain on
extinguishment of long-term debt, and certain non-recurring
expenses. Adjusted Gross Profit is defined as gross profit plus
depreciation and amortization expense related to cost of
services.
Adjusted EBITDA is used by our management as a
supplemental financial measure to assess: (i) the financial
performance of our assets without regard to financing methods,
capital structure, 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.
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.
Adjusted EBITDA and Adjusted Gross Profit 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 any other measure of
financial performance or liquidity presented in accordance with
GAAP. In addition, our calculations of Adjusted EBITDA and Adjusted
Gross Profit may not be comparable to EBITDA, gross profit or other
similarly titled measures utilized by other companies since such
other companies may not calculate EBITDA, gross profit or similarly
titled measures in the same manner. Further, the results presented
by Adjusted EBITDA and Adjusted Gross Profit cannot be achieved
without incurring the costs that the measure excludes.
|
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP
ADJUSTED EBITDA |
(In thousands) |
|
|
Three Months EndedMarch 31, |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
5,223 |
|
|
$ |
(1,474 |
) |
Interest expense, net |
|
3,497 |
|
|
|
3,141 |
|
Income taxes |
|
3,118 |
|
|
|
624 |
|
Depreciation and amortization
expense (1) |
|
3,032 |
|
|
|
2,499 |
|
Provision for doubtful
accounts |
|
941 |
|
|
|
— |
|
Non-cash equity-based
compensation |
|
800 |
|
|
|
1,053 |
|
Gain on disposal of property
and equipment, net |
|
(1,274 |
) |
|
|
(181 |
) |
Foreign exchange (gain) loss,
net (2) |
|
(127 |
) |
|
|
174 |
|
Gain on extinguishment of
long-term debt |
|
— |
|
|
|
(53 |
) |
Non-recurring expenses
(3) |
|
711 |
|
|
|
253 |
|
Adjusted EBITDA |
$ |
15,921 |
|
|
$ |
6,036 |
|
|
|
|
|
|
|
|
|
(1) |
Additional depreciation and amortization expense not related to
cost of services was $170 and $78 for the three months ended March
31, 2019 and 2018, respectively. |
(2) |
Includes both realized and unrealized foreign exchange
transactions. |
(3) |
For both periods, primarily consists of various non-operating
expenses incurred at the corporate location for legal and
consulting fees. |
|
UNAUDITED RECONCILIATION OF GROSS PROFIT TO NON-GAAP
ADJUSTED GROSS PROFIT |
(In thousands) |
|
|
Three Months EndedMarch 31, |
|
2019 |
|
2018 |
|
|
|
|
|
|
Gross profit as presented |
$ |
20,326 |
|
$ |
8,697 |
Depreciation and amortization
expense (1) |
|
2,862 |
|
|
2,421 |
Adjusted gross profit |
$ |
23,188 |
|
$ |
11,118 |
|
|
|
|
|
|
(1) |
Depreciation and amortization on equipment used in operations. |
Contact
SAExploration Holdings, Inc.
Ryan Abney
Vice President, Finance
(281) 258-4400
rabney@saexploration.com
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