Mitcham Industries (MIND) Reports Q2 Loss Per Share of $0.49

September 2, 2015 4:59 PM

Mitcham Industries (NASDAQ: MIND) reported Q2 EPS of ($0.49), versus ($0.26) reported last year. Revenue for the quarter came in at $7.6 million, versus $19.5 million reported last year.

Rob Capps, Executive Vice President, Chief Financial Officer and Interim Co-COO, stated, "We continue to be impacted by very challenging market conditions in the seismic industry. Our second quarter, which is seasonally the weakest quarter of the year in terms of seismic activity, proved to be very difficult as we continue to operate in the midst of a global slowdown in the oil and gas industry. Our results were also impacted by unexpected shipment delays at Seamap, which reduced second quarter revenues by approximately $6.0 million. We currently anticipate that all of these orders will now ship in the third quarter.

"Our equipment leasing revenues were impacted by reduced demand for our leased equipment, excess available equipment in most markets and resulting pressure on pricing. Land seismic exploration activity is quite subdued throughout the Western Hemisphere and significant excess capacity remains in this market. As a result of these market conditions and to normal seasonal declines, both North America and Latin America made nominal contributions to our leasing revenues this quarter. Europe remains one of our few markets with a stable level of activity due to an anchor project that should continue well into next fiscal year. Activity in the Russian market during the quarter was impacted by the normal seasonal decline, although we did have a couple of smaller projects continue past the end of the winter season.

"Marine leasing activity was up nominally both versus last year and sequentially, despite the ongoing consolidation in the industry and the overall decline in seismic exploration activity. Nevertheless, we continue to experience some uptick in inquiries for the rental of marine equipment. At Seamap, three significant orders that we had expected to ship in the second quarter were delayed due to a number of internal and external factors, but we now expect all these orders to be completed in the third quarter.

"Looking at the remainder of fiscal 2016, we expect the overall seismic market activity to remain very challenging with limited visibility. However, based on early customer inquiries, it appears that the demand for equipment in Russia this winter may be at least as strong as last year. There are some early indications of activity in Alaska for late this year and early next year, but in Canada, early indications for the upcoming winter season are not encouraging. We have provided bids for projects scheduled in Latin America later this year. In addition, we have fielded inquiries for projects in various locations in the Eastern Hemisphere. On balance, we expect a slight increase in our leasing revenues in the third quarter with further progress in the fourth quarter, aided by normal seasonal improvement in some areas.

"Seamap should post a much improved second half driven by the delivery of delayed shipments from the second quarter, as well as additional shipments scheduled in the back half of the year. Although Seamap is impacted by the overall condition in the seismic industry, we do see opportunities for equipping various new or reconfigured vessels, particularly in the Eastern Hemisphere.

"We also expect a much improved second half of the year from sales of oceanographic and hydrographic equipment by our Australian subsidiary. Many expected projects were not scheduled for delivery until later this year.

"Despite the disappointing results and very difficult market conditions, we generated positive Adjusted EBITDA and cash flow from operating activities during the quarter. Cash flow from operating activities was over $5.0 million during the second quarter and $11.6 million for the first half of our fiscal year. During the first half of fiscal 2016, we reduced our outstanding indebtedness by $12.1 million, and subsequent to July 31, 2015, decreased our debt by another $1.3 million. Accordingly, as of today our net debt is approximately $10.0 million. We have significantly reduced our operating costs and continue to look for additional measures to reduce our direct and indirect costs.

"We have considerable experience navigating through these industry cycles, and believe our strong balance sheet provides stability and flexibility. Our capital structure is solid, and we believe that it positions us to make the most of any opportunities that may arise in this environment."

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