Pulse Seismic Inc. press release
Pulse Data Inc. reports Q3 2005 results and declaration of quarterly dividend
TSX - Toronto Stock Exchange ยท Canada
TSX Symbol - PSD
CALGARY, Nov. 9 /CNW/ - Mr. Ken MacDonald, President and Chief Executive Officer of Pulse Data Inc. ("Pulse" or "the Company") is pleased to report the financial and operating results of Pulse for the three and nine months ended September 30, 2005. Mr. MacDonald is also pleased to announce that Pulse has declared its tenth consecutive quarterly dividend. This dividend is $0.025 per common share and will be paid on December 20, 2005 to shareholders of record at the close of business on December 6, 2005. The Company's Dividend Reinvestment Plan for eligible shareholders will be available for this dividend. The Company has also recently amended its Dividend Reinvestment and Optional Cash Purchase Plan whereby the minimum required purchase under the Optional Cash Purchase program has been reduced to $200 per remittance for eligible shareholders. Please see the Company's website at www.pulsedatainc.com for further details.
HIGHLIGHTS
Free cash flow(1) for the nine months ended September 30, 2005 was $15.7 million, compared to $4.9 million in the same period in 2004.
Based on the Company's current share price, the dividend noted above represents an approximate yield of 4.3%.
Seismic data library sales increased by 31% to a record level of $22.5 million for the nine months ended September 30, 2005 compared to $17.2 million for the nine months ended September 30, 2004.
Pulse had a working capital position of $11.8 million at September 30, 2005 compared to a working capital deficiency of $4.2 million at September 30, 2004.
Pulse repaid $3.9 million of long-term debt over the nine-month period ended September 30, 2005.
Pulse added 2,740 net square kilometres of 3D seismic to its data library during the first three quarters of 2005 through the purchase of a significant seismic data set in June 2005 (2,500 net square kilometres) and through two participation surveys (240 net square kilometres), compared to the addition of 780 net square kilometres of 3D data for the same period in 2004.
LiDAR segment revenue for the third quarter of 2005 was $2.5 million, an 86% increase over $1.3 million recorded in the third quarter of 2004.
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Financial Highlights: (000's except per share data) 3 months ended 9 months ended September 30 September 30 2005 2004 2005 2004 (unaudited) (unaudited) Revenue Data library sales $ 8,614 $ 4,721 $ 22,466 $ 17,154 Participation surveys $ 607 $ (116) $ 5,638 $ 12,259 LiDAR $ 2,453 $ 1,321 $ 6,489 $ 1,827 Trango & other $ 158 $ 213 $ 893 $ 642 Total revenue $ 11,832 $ 6,139 $ 35,486 $ 31,882 Amortization of data libraries $ 4,627 $ 3,698 $ 14,757 $ 16,439 Net earnings $ 1,061 $ (1,590) $ 2,468 $ 2,414 Net earnings per share: basic and diluted $ 0.02 $ (0.04) $ 0.05 $ 0.06 Funds from operations(1) $ 9,640 $ 2,094 $ 21,157 $ 21,579 Funds from operations per share(1): basic $ 0.21 $ 0.05 $ 0.46 $ 0.50 diluted $ 0.20 $ 0.05 $ 0.45 $ 0.50 Free cash flow(1) $ 10,261 $ 2,393 $ 15,676 $ 4,940 Working capital (deficiency) $ 11,804 $ (4,160) $ 11,804 $ (4,160) Total assets $ 123,328 $ 107,133 $ 123,328 $ 107,133 Capital expenditures Seismic data purchases $ - $ - $ 15,225 $ - Participation surveys $ (621) $ (299) $ 5,481 $ 16,639 Changes to work in progress $ 6 $ 4,113 $ 8 $ (4,253) Property & equipment additions $ 246 $ 313 $ 1,371 $ 349 Total capital expenditures $ (369) $ 4,127 $ 22,085 $ 12,735 Long-term debt $ 22,303 $ 12,631 $ 22,303 $ 12,631 Shareholders' equity $ 79,167 $ 72,402 $ 79,167 $ 72,402
Weighted average shares outstanding: basic 46,282,828 42,966,532 46,047,366 42,981,869 diluted 47,246,570 43,307,381 46,726,355 43,409,351 Shares outstanding at period end 46,460,354 45,585,424 46,460,354 45,585,424
(1) These non-GAAP financial measures are defined in the Financial Summary below.
Seismic Library:
2D in net kilometres 239,820 239,013 239,820 239,013 3D in net square kilometres 9,256 6,080 9,256 6,080
Year ended Dec. 31 2004 (audited) Revenue Data library sales $ 25,611 Participation surveys $ 19,979 LiDAR $ 3,886 Trango & other $ 1,792 Total revenue $ 51,268 Amortization of data libraries $ 22,862 Net earnings $ 7,719 Net earnings per share: basic and diluted $ 0.18 Funds from operations(1) $ 36,776 Funds from operations per share(1): basic $ 0.84 diluted $ 0.84 Free cash flow(1) $ 11,988 Working capital (deficiency) $ 3,845 Total assets $ 108,426 Capital expenditures Seismic data purchases $ 1,295 Participation surveys $ 24,788 Changes to work in progress $ (8,436) Property & equipment additions $ 574 Total capital expenditures $ 18,221 Long-term debt $ 11,203 Shareholders' equity $ 77,507
Weighted average shares outstanding: basic 43,646,866 diluted 43,990,061 Shares outstanding at period end 45,774,816
(1) These non-GAAP financial measures are defined in the Financial Summary below.
Seismic Library:
2D in net kilometres 239,288 3D in net square kilometres 6,522
FINANCIAL SUMMARY
The Company's continuous disclosure documents provide discussion and analysis of "free cash flow", "funds from operations" and "funds from operations per share". These financial measures do not have standard definitions prescribed by generally accepted accounting principles in Canada (GAAP) and therefore they may not be comparable to similar measures disclosed by other companies. The Company has included these non-GAAP financial measures because they are used by management, investors, analysts and others as measures of the Company's financial performance. The Company's definition of free cash flow is cash available for debt servicing, discretionary capital expenditures and the payment of dividends, and is calculated as funds from operations less participation survey additions to the data library. The Company's definition of funds from operations is cash flow from operations as prescribed by Canadian generally accepted accounting principles, but excluding the impact of changes in non-cash working capital. Funds from operations per share is defined as funds from operations divided by the weighted average number of shares outstanding for the period.
Overview
Net earnings for the nine months ended September 30, 2005 were $2.5 million ($0.05 per share diluted), compared to $2.4 million ($0.06 per share diluted) for the same period in 2004. Funds from operations for the first nine months of 2005 were $21.2 million ($0.45 per share diluted), compared to $21.6 million ($0.50 per share diluted) generated for the same period in 2004. These per share figures are based on the weighted average diluted shares outstanding of 46,726,355 for the first nine months of 2005, compared to 43,409,351 for the comparative period in 2004. Net earnings for the three-month period ended September 30, 2005 were $1.1 million ($0.02 per share diluted) compared to a loss of $1.6 million ($0.04 per share diluted) for the same period in 2004. Funds from operations for the third quarter of 2005 of $9.6 million ($0.20 per share diluted) were 360.4% higher than the $2.1 million ($0.05 per share diluted) generated in the third quarter of 2004. These per share figures are based on the weighted average diluted shares outstanding of 47,246,570 for the third quarter of 2005 compared to 43,307,381 for the third quarter of 2004. On June 15, 2005 Pulse successfully completed the acquisition of a significant seismic data base which has increased the Company's 3D data library by 40%. The acquisition consists of approximately 2,500 net square kilometres of 3D seismic data and 500 net kilometres of 2D seismic data and is located in the south-central area of Alberta. This valuable addition is complementary to Pulse's existing database and is located in an area that has recently seen a significant increase in exploration activity by oil and gas companies. The purchase price of $15.2 million was principally financed by term debt through Pulse's existing debt provider. The effective date of the transaction was May 2, 2005.
Revenue
Stated in thousands of dollars (In 2004, the LiDAR segment includes revenues from May 26 to September 30)
For the nine months ended September 30 Business Segment 2005 2004 % of % of Total Total Revenue Revenue Revenue Revenue % Change Seismic revenue: Data library sales $ 22,466 63.3 $ 17,154 53.8 31.0 Participation surveys 5,638 15.9 12,259 38.5 (54.0) LiDAR revenue 6,489 18.3 1,827 5.7 255.2 Trango revenue 1,065 3.0 617 1.9 72.6 Corporate and other (172) (0.5) 25 0.1 (788.0) Total $ 35,486 100 $ 31,822 100 11.3
For the three months ended September 30 Business Segment 2005 2004 % of % of Total Total Revenue Revenue Revenue Revenue % Change Seismic revenue Data library sales $ 8,614 72.8 $ 4,721 76.9 82.5 Participation surveys 607 5.1 (116) (1.9) 623.3 LiDAR revenue 2,453 20.7 1,321 21.5 85.7 Trango revenue 203 1.7 266 4.3 (23.7) Corporate and other (45) (0.3) (53) (0.8) 15.0 Total $ 11,832 100 $ 6,139 100 92.7
Seismic Data Segment
The seismic data segment, which includes data library sales and participation survey revenue, contributed 79.2% of total revenue for the Company in the first nine months of 2005, and 77.9% of total revenue for the third quarter of the current year. With the Terrapoint acquisition being effective May 26, 2004 the seismic data segment contributed 92.3% of total revenue for the nine-month period ended September 30, 2004 and 75.0% of total revenue for the third quarter. Within the seismic data segment the Company generates two types of revenue: data library sales and participation survey revenue. While participation survey revenue increases total revenues and earnings significantly in periods of high survey activity, participation surveys represent an investment in the seismic data library that initially draws down the capital resources of the Company. Data library sales generate immediate free cash flow through licenses of seismic data from Pulse's existing seismic data library, which can occur many times over without further costs being incurred. Seismic data segment revenue for the nine months ended September 30, 2005 reflects an overall decrease of 4.4% from the comparable nine-month period in 2004, but includes a 31.0% increase in data library sales for the same period, and an 82.5% increase in data library sales for the third quarter of 2005 compared to the third quarter of 2004. The primary reason for the decrease in total seismic data segment revenue was that Pulse recorded $5.6 million of participation survey revenue in the first three quarters of 2005, compared to $12.3 million of participation survey revenue in the first three quarters of 2004. The 2004 period had a higher than normal level of participation surveys delivered. The Company's decision to add to its data library in 2005 by purchasing seismic data rather than conducting extensive participation surveys has resulted in lower total seismic segment revenue, but has resulted in a more substantial increase in data added to the seismic library. Pulse added 2,740 net square kilometres of 3D seismic to its library during the first nine months of 2005, compared to 780 net square kilometres of 3D added during the same period in 2004.
LiDAR Segment
LiDAR revenue for the third quarter of 2005 increased 85.7% to $2.5 million over the third quarter of 2004 revenue of $1.3 million, to reach a year-to-date total revenue of $6.5 million. It is not relevant to make comparisons to the nine-month period ended September 30, 2004, as the acquisition of the LiDAR business occurred May 26, 2004. The increased third quarter sales were attributable to an increased marketing effort and improvements in operational efficiencies and processes since the acquisition of the LiDAR companies in 2004.
Trango Segment
Revenue for the first nine months of 2005 increased 72.6% to $1.1 million in 2005 from $617,000 in 2004. For the third quarter of 2005, revenue decreased 23.7% to $203,000 from the $266,000 generated in the third quarter of 2004. These improved results in the year to date for 2005 are mainly the result of work completed on major contracts awarded to Trango by three oil and gas companies in the United States in late 2004.
Data Library
Pulse acquires seismic data to grow its data library through two primary methods. The Company conducts participation surveys each year, and also makes data purchases when the opportunity arises to acquire the proprietary rights to complementary seismic data. During the first nine months of 2005 Pulse invested $20.7 million to acquire new seismic data. In the second quarter of 2005 the Company purchased the proprietary rights to approximately 2,500 net square kilometres of 3D seismic data and 500 net kilometres of 2D seismic data, located in the south-central area of Alberta, for $15.2 million. Additionally, in the first nine months of 2005 the Company invested $5.5 million to acquire new data through participation surveys. In comparison, the Company spent $8.2 million on participation surveys during the first nine months of 2004. This amount was in addition to $8.4 million that was recorded at December 31, 2003 as work in progress, relating to the participation survey programs completed in the first quarter of 2004, which was converted to data library additions in 2004 with the delivery of the data in February and March 2004. In 2005, Pulse has added 2,740 net square kilometres of 3D data to its library, compared to 780 net square kilometres of 3D data during the comparable period in 2004.
Liquidity, Capital Resources and Capital Requirements
The working capital position of Pulse, including the current portion of long-term debt of $6.1 million, at September 30, 2005 was $11.8 million, compared to $3.8 million at December 31, 2004 and a deficiency of $4.2 million at September 30, 2004. The working capital position has improved by 210.5% compared to the December 31, 2004 position as a result of increased accounts receivable relating to the high level of seismic data library sales and LiDAR sales achieved in the third quarter, as well as the decrease in accounts payable. The accounts payable balance was low due to the fact that the upcoming fall/winter participation programs had just begun and a low level of costs had been incurred as of September 30, 2005. All working capital covenants with Pulse's lenders have been met throughout each of these periods. With the continuation of the trend of very strong existing seismic data sales levels, and significantly improved operational procedures and cost structures combined with a solid contract backlog position in Terrapoint and Trango, Pulse management expects that its funds from operations will be sufficient to finance operations, debt servicing, dividends and budgeted capital expenditures for the remainder of 2005. The seismic data library is continually growing with the acquisition of new, principally 3D data through participation surveys, and with the purchase of high-quality seismic data. The ongoing growth in the Company's seismic data library continues to enable Pulse to provide valuable seismic data to industry participants into the future. Historical data sales analysis shows that most seismic data retains its value for many years, and with the technological advancements in reprocessing that have been made in recent years, the Company's clients are able to enhance the quality of older data in the library. With the acquisition of Terrapoint, Pulse has added airborne and ground-based LiDAR services to its product offerings, and has begun accessing customers in new industries and markets. As well Trango has demonstrated an ability to develop new products and penetrate new markets in the United States. Pulse also has a $10 million operating line of credit facility with Scotiabank. Any drawdowns on this facility are repayable on demand and bear interest at the bank's prime lending rate plus 0.25%. This facility was not utilized throughout 2002, 2003, 2004 and we do not anticipate using it in 2005.
PULSE DATA INC. Interim Consolidated Balance Sheets
(In thousands of dollars) September 30, December 31, 2005 2004 (unaudited) (audited) Assets
Current assets: Cash and cash equivalents $ 7,473 $ 3,827 Accounts receivable 16,067 12,832 Prepaid expenses 1,138 234 Work in progress 1,554 693 26,232 17,586
Data libraries 80,967 75,010 Property and equipment 14,410 15,042 Long-term receivable 1,100 - Investments 432 667 Deferred charges 187 121
$ 123,328 $ 108,426
Liabilities and Shareholders' Equity
Current liabilities: Accounts payable and accrued liabilities $ 2,432 $ 4,466 Deferred revenue 5,905 3,613 Current portion of long-term debt 6,091 5,662 14,428 13,741
Long-term debt 22,303 11,203
Future income taxes 7,430 5,975
Shareholders' equity: Share capital 51,615 50,531 Contributed surplus 865 449 Retained earnings 26,687 26,527 79,167 77,507
$ 123,328 $ 108,426
PULSE DATA INC. Interim Consolidated Statements of Earnings and Retained Earnings
(In thousands of dollars, except per share data) Three months Nine months ended September 30 ended September 30 2005 2004 2005 2004 (unaudited) (unaudited)
Revenue $ 11,832 $ 6,139 $ 35,486 $ 31,882
Operating expenses: Amortization of data libraries 4,627 3,698 14,757 16,439 Operating 2,606 3,096 8,327 5,570 Depreciation and amortization 765 696 2,003 1,101 7,998 7,490 25,087 23,110
Gross margin 3,834 (1,351) 10,399 8,772
General and administrative expenses 1,447 687 4,724 2,873 Research and development expenses 323 - 836 -
Interest: Long-term debt 408 236 878 791 Other (18) (8) (81) 267 390 228 797 1,058
Earnings (loss) before income taxes 1,674 (2,266) 4,042 4,841
Income taxes: Current (recovery) (2,511) 53 119 926 Future (reduction) 3,124 (729) 1,455 1,501 613 (676) 1,574 2,427
Net earnings (loss) $ 1,061 $ (1,590) $ 2,468 $ 2,414
Retained earnings, beginning of the period 26,784 23,952 26,527 21,027 Dividend paid (1158) (568) (2,308) (1,647) Retained earnings, end of the period $ 26,687 $ 21,794 $ 26,687 $ 21,794
Earnings (loss) per share, basic and diluted $ 0.02 $ (0.04) $ 0.05 $ 0.06
PULSE DATA INC. Interim Consolidated Statements of Cash Flows (In thousands of dollars) Three months Nine months ended September 30 ended September 30 2005 2004 2005 2004 (Unaudited) (Unaudited)
Cash provided by (used in):
Operations: Net earnings $ 1,061 $ (1,590) $ 2,468 $ 2,414 Items not involving cash: Amortization of data libraries 4,627 3,698 14,757 16,439 Depreciation and amortization 765 696 2,003 1,101 Unrealized loss (gain) on foreign exchange (151) (149) (87) (149) Future income taxes (reduction) 3,124 (729) 1,455 1,501 Stock-based compensation 204 161 561 253 Other 10 7 - 20 Funds from operations 9,640 2,094 21,157 21,579 Net change in non-cash working capital items related to operations (4,983) 5,059 (4,982) (1,588) Increase (decrease) in non-current deferred revenue (250) (269) - (324) 4,407 6,884 16,175 19,667
Financing: Long-term debt - - 15,439 - Repayment of long-term debt (1,081) (1,267) (3,910) (3,401) Issue of share capital 381 18 939 610 Dividends paid (1,158) (568) (2,308) (1,647) (1,858) (1,817) 10,160 (4,438)
Investing: Additions to data libraries through participation surveys 621 299 (5,481) (16,639) Seismic data purchases - - (15,225) - (Increase) decrease in participation surveys in progress (6) (4,113) (8) 4,253 Decrease in investments - - 235 285 Additions to property and equipment (246) (313) (1,371) (349) Business acquisition - - - (2,142) Net change in non-cash working capital items related to investing 572 1,685 (839) (5,481) 941 (2,442) (22,689) (20,073) Increase (decrease) in cash position 3,490 2,625 3,646 (4,844)
Cash and cash equivalents, beginning of period 3,983 1,549 3,827 9,018 Cash and cash equivalents, end of period $ 7,473 $ 4,174 $ 7,473 $ 4,174
During the three and nine month periods ended September 30, 2005 the Corporation paid interest of $ 384,000 (2004-$241,000) and $ 774,000 (2004-$987,000), respectively. During the three and nine month periods ended September 30, 2005 the Corporation paid income taxes of $ 44,700 (2004-($1,324,000)) and $ 140,400 (2004-$1,069,000), respectively.
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