Pulse Seismic Inc. press release
Pulse Data Inc. reports Q2 2006 results, declaration of quarterly dividend and completion of rebuilding plan for the LiDAR segment following writedown of capital assets
TSX - Toronto Stock Exchange ยท Canada
TSX Symbol - PSD
CALGARY, Aug. 13 /CNW/ - Mr. Ken MacDonald, President and Chief Executive Officer of Pulse Data Inc. ("Pulse" or "the Company") reports a 21 percent increase in seismic data library sales for the six months ended June 30, 2006. The Company also declared its thirteenth consecutive quarterly dividend. The dividend of $0.0375 per common share will be paid on September 20, 2006 to shareholders of record at the close of business on September 6, 2006. The Company's Dividend Reinvestment Plan for eligible shareholders will be available for this dividend. Pulse recorded a writedown of $8.8 million ($5.6 million after income taxes) on the Terrapoint LiDAR capital assets to their estimated residual value. The retirement of Terrapoint's older, high altitude systems, and their replacement with more reliable sensors, will better position Pulse's LiDAR segment to re-establish itself as a high quality reliable LiDAR provider. A conference call to review the second quarter results has been scheduled for 1:00 pm ET (11:00 am MT) on Monday August 14, 2006. The conference call dial-in number is (416) 644-3417 (Toronto) and 1-866-250-4907. A live webcast will be accessible at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)1560680
<< HIGHLIGHTS
Seismic data library sales increased by 21 percent to $16.7 million for the six months ended June 30, 2006 from $13.9 million for the first half of 2005.
Pulse successfully completed and delivered a 237 net square kilometre 3D seismic participation survey in the second quarter.
Free cash flow for the six months ended June 30, 2006 was $4.9 million, compared to $5.6 million in the first half of 2005.
Pulse had a working capital position of $16.4 million (including cash of $17.6 million) at June 30, 2006 compared to $17.5 million at December 31, 2005 and $5.3 million at June 30, 2005.
Pulse repaid a total of $3.1 million in long-term debt during the first half of 2006, reducing long-term debt to $17.9 million at June 30, 2006.
Pulse completed the sale of Trango Technologies Inc. ("Trango") to Fugro Canada Inc. for total proceeds of $1.8 million cash plus a working capital adjustment of approximately $400,000, effective June 30, 2006. A Letter of Intent to sell Trango was announced by Pulse on May 15, 2006.
Pulse recorded a writedown of $8.8 million ($5.6 million after income taxes) on the Terrapoint LiDAR capital assets for the six-month period ended June 30, 2006 to their estimated residual value. This writedown is primarily related to the retirement of four older high-altitude LiDAR data collection systems and their related proprietary processes and software acquired as part of the United States operations of Mosaic Mapping and includes the first quarter 2006 writedown of one of these systems in the amount of $1.2 million. The systems require high maintenance and have demonstrated low reliability. >>
In its first quarter 2006 report, Pulse addressed the possibility of an additional writedown on the remaining older high-range systems. The high-range systems acquired as part of the United States operations of Mosaic have been replaced by a more reliable 3100 high-range system from Optech International, which allows Terrapoint to carry out projects more efficiently. The writedown does not diminish Pulse's confidence in the future of Terrapoint and LiDAR technology. Our confidence is underscored by Pulse's appointment on July 6, 2006 of Mr. Jake Jenkins as Vice President Sales and Marketing of Terrapoint Canada Inc. Mr. Jenkins was previously Director of the Airborne Terrestrial Survey Division at Optech International, a Toronto-based LiDAR manufacturer. Mr. Jenkins has 22 years of extensive worldwide experience in the fields of remote sensing, LiDAR technology and related sales and marketing.
<< Financial Highlights Continuing Operations (excludes the results of Trango) ('000's except per share data) Unaudited
3 months ended 6 months ended Year ended June 30 June 30 Dec. 31 2006 2005 2006 2005 2005
Revenue from continuing operations: Data library sales $ 6,634 $ 8,059 $ 16,732 $ 13,852 $ 34,905 Participation surveys $ 3,058 $ 68 $ 3,058 $ 5,031 $ 10,006 LiDAR $ 1,813 $ 2,556 $ 3,266 $ 4,036 $ 8,452 Corporate & other $ (34) $ (26) $ (83) $ (127) $ (226) Total revenue from continuing operations $ 11,471 $ 10,657 $ 22,973 $ 22,792 $ 53,137 Amortization of data libraries $ 7,328 $ 3,996 $ 12,051 $ 10,130 $ 21,536 Net earnings (loss) from continuing operations $ (5,150) $ 731 $ (5,078) $ 1,534 $ 6,700 Net earnings (loss) from continuing operations per share: basic and diluted $ (0.11)(a) $ 0.01 $ (0.11)(a) $ 0.03 $ 0.14 Funds from continuing operations (b) $ 5,605 $ 5,215 $ 11,954 $ 11,664 $ 35,265 Funds from continuing operations per share(b): Basic $ 0.12 $ 0.11 $ 0.26 $ 0.25 $ 0.76 Diluted $ 0.12 $ 0.11 $ 0.25 $ 0.25 $ 0.75 Free cash flow(b) $ (1,557) $ 5,210 $ 4,886 $ 5,562 $ 23,706 Working capital $ 16,398 $ 5,348 $ 16,398 $ 5,348 $ 17,503 Total assets $ 112,928 $ 121,635 $ 112,928 $ 121,635 $ 129,882 Capital expenditures: Seismic data purchases $ - $ 15,225 $ - $ 15,225 $ 15,225 Participation surveys $ 7,162 $ 5 $ 7,068 $ 6,102 $ 11,559 Changes to work in progress $ (1,113) $ 4 $ (181) $ 2 $ 190 Property & equipment additions $ 1,568 $ 682 $ 1,717 $ 1,113 $ 1,504 Total capital expenditures $ 7,617 $ 15,916 $ 8,604 $ 22,442 $ 28,478 Long-term debt $ 17,872 $ 23,881 $ 17,872 $ 23,881 $ 20,772 Shareholders' equity $ 75,573 $ 78,679 $ 75,573 $ 78,679 $ 82,432 Weighted average shares outstanding: Basic 46,792,140 46,078,884 46,336,770 45,927,686 46,161,608 Diluted 48,078,834 46,750,196 47,531,182 46,559,971 46,842,744 Shares outstanding at period end 47,254,519 46,219,768 47,254,519 46,219,768 46,559,778
(a) Basic weighted average shares outstanding are used to calculate loss per share (b) These non-GAAP financial measures are defined in the Financial Summary below
Operational Highlights:
2D in net kilometres 239,822 239,820 239,822 239,820 239,822 3D in net square kilometres 9,679 9,256 9,679 9,256 9,442 >>
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 (GAAP) in Canada and therefore they may not be comparable to similar measures disclosed by other companies. The Company has included these non-GAAP financial measures because management, investors, analysts and others use them 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 total participation survey additions to the data library. The Company's definition of funds from operations is cash flow from operations as prescribed by Canadian GAAP, 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
The loss from continuing operations for the six months ended June 30, 2006 was $5.1 million ($0.11 per share basic and diluted), compared to earnings of $1.5 million ($0.03 per share diluted) for the first half of 2005. Without the writedown of Terrapoint's assets, net earnings from continuing operations for the six months ended June 30, 2006 would have been $545,000 compared to $1.5 million for the 2005 period, Funds from continuing operations for the first six months of 2006 was $12.0 million ($0.25 per share diluted) compared to $11.7 million ($0.25 per share diluted) for the first six months of 2005. The earnings per share for 2005 and funds from continuing operations figures for 2006 and 2005 are based on the weighted average diluted shares outstanding of 47,531,182 for the first half of 2006, compared to 46,559,971 for the first half of 2005. In 2006, the six month per-share loss figure is based on the basic weighted average number of shares outstanding of 46,336,770. The loss from continuing operations for the three months ended June 30, 2006 was $5.2 million ($0.11 per share basic and diluted), compared to net earnings of $731,000 ($0.01 per share diluted) for the second quarter of 2005. Funds from continuing operations for the second quarter of 2006 was $5.6 million ($0.12 per share diluted) compared to a similar $5.2 million ($0.11 per share diluted) for the second quarter of 2005. The earnings per share in 2005 and funds from continuing operations figures for 2006 and 2005 are based on the weighted average diluted shares outstanding of 48,078,834 for the second quarter of 2006, compared to 46,750,196 for the second quarter of 2005. In 2006, the three month per-share loss figure is based on the basic weighted average number of shares outstanding of 46,792,140. The depreciation expense in the LiDAR segment for the six months ended June 30, 2006 was $9.9 million compared to $1.1 million for the same period in 2005. Included in the 2006 figure is an $8.8 million writedown of the Terrapoint LiDAR capital assets, primarily related to older high-altitude LiDAR data collection systems and their related proprietary processes and software that have been written down to their estimated residual value. The residual value reflects the estimated fair value of the components that Terrapoint is currently using or will be able to use in its other systems.
<< Revenue For the six months ended June 30 (stated in thousands of dollars)
2006 2005 Revenue % of Revenue % of % Business Segment Total Total Change Revenue Revenue Seismic Data: Data library sales $ 16,732 72.8 $ 13,852 60.8 21 Participation surveys 3,058 13.3 5,031 22.1 (39) LiDAR 3,266 14.2 4,036 17.7 (19) Corporate and other (83) (0.3) (127) (0.6) 35 Total $ 22,973 100 $ 22,792 100 1
Revenue For the three months ended June 30 (stated in thousands of dollars)
2006 2005 Revenue % of Revenue % of % Business Segment Total Total Change Revenue Revenue Seismic Data: Data library sales $ 6,634 57.8 $ 8,059 75.6 (18) Participation surveys 3,058 26.7 68 0.6 4,397 LiDAR 1,813 15.8 2,556 24.0 (29) Corporate and other (34) (0.3) (26) (0.2) (31) Total $ 11,471 100 $ 10,657 100 8 >>
Seismic Data Segment
The seismic data segment, which includes data library sales and participation survey revenues, contributed 86.1 percent of total revenue from continuing operations for the Company in the first half of 2006, and 84.5 percent of total revenue from continuing operations in the second quarter of 2006. In 2005, the seismic data segment contributed 82.9 percent of total revenue for the six-month period ended June 30 and 76.2 percent of total revenue for the second quarter. For the six months ended June 30, 2006, Pulse increased total seismic revenue by $900,000 to $19.8 million compared to $18.9 million for the same period in 2005. 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 revenue and earnings significantly in periods of high survey activity, participation surveys represent an investment in the seismic data library that initially draws down the Company's capital resources. Data library sales generate immediate free cash flow through licenses of seismic data from the existing library of seismic data, which can occur many times without incurring further costs. Seismic data segment revenue for the six months ended June 30, 2006 increased by 4.8 percent from the same period in 2005. The increase was due in part to higher demand for seismic data for exploration from junior oil and natural gas companies. In addition, a higher proportion of 3D data sales were made at higher prices in the first half of 2006 compared to the first half of 2005. For the three months ended June 30, 2006, seismic data segment revenue increased by 19.8 percent from the comparable period in 2005 as a result of higher participation survey revenues of $3.0 million, offset by lower data sales of $1.4 million. Participation survey revenue for the first half of 2006 decreased to $3.1 million from $5.0 million for the comparable period in 2005 principally as a result of lower participation funding on the survey completed during the second quarter. In the second quarter of 2006, Pulse completed and delivered a 237 square kilometre, 3D participation survey in west-central Alberta.
LiDAR Segment
LiDAR revenue for the first half of 2006 decreased by 19.1 percent from the same period in 2005. For the second quarter of 2006 revenue decreased by 29.1 percent compared to the second quarter of 2005. The decrease is attributed to lower sales during the period. Terrapoint has now strengthened its marketing efforts with the appointment of Mr. Jake Jenkins as Vice President Sales and Marketing of Terrapoint Canada Inc. Terrapoint has also added several experienced sales people. Terrapoint also purchased a new high-altitude data collection system in the second quarter of 2006 which allows projects to be completed more quickly, at lower cost to customers and at higher margins.
Trango Segment
The Trango segment of Pulse's business has been reported as discontinued operations as of June 30, 2006. Trango, a wholly-owned subsidiary of Pulse, was classified as assets held for sale as of that date, and subsequently sold on July 31, 2006, for $1.8 million cash plus a working capital adjustment of approximately $400,000.
Data Library
Pulse acquires seismic data to grow its data library through two primary methods. The Company conducts participation surveys, and also purchases proprietary rights to complementary seismic data. During the first half of 2006, Pulse invested $7.1 million in a 237 square kilometre, 3D participation survey in west-central Alberta. In the first half of 2005 the Company invested $6.1 million to complete two 3D participation surveys in northern Alberta for a total addition to the data library of 241 square kilometres of 3D seismic data. The Company did not purchase any data in the first half of 2006, whereas in the first half 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 south-central Alberta, for $15.2 million. The LiDAR data library acquired with Terrapoint includes approximately $805,000 of data acquired in 2003, of which $439,000 remains unamortized at June 30, 2006.
Liquidity, Capital Resources and Capital Requirements
At June 30, 2006 the working capital position of Pulse, including the current portion of long-term debt of $5.9 million, was $16.4 million, compared to $17.5 million at December 31, 2005. With the continued trend of very strong seismic data sales levels, Pulse management expects that its funds from operations will be sufficient to finance operations, service debt, and pay dividends and budgeted capital expenditures throughout the remainder of 2006. The seismic data library is continually growing through the acquisition of new seismic data - principally 3D. The ongoing growth in the Company's seismic data library continues to position Pulse as a leading provider of valuable seismic data to industry participants well into the future. Historical data sales analysis shows that most seismic data retains its value for many years. Combined 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. Although quarterly results can show significant swings in working capital because of the impact of participation surveys, Pulse remains liquid. The capital-intensive nature of the seismic business is such that working capital deficiency balances can accumulate during the busy participation survey season, only to be reversed upon delivery of the seismic data to survey participants. Because Pulse's largest expense in any given period is a non-cash amortization expense, funds from operations are usually much higher than net earnings.
<< PULSE DATA INC. Interim Consolidated Balance Sheets
(In thousands of dollars) (unaudited) June 30, December 31, 2006 2005 Assets
Current assets: Cash and cash equivalents $ 17,594 $ 11,012 Accounts receivable 11,862 20,249 Prepaid expenses 343 315 Work in progress 779 993 Assets of discontinued operations 1,168 1,750 31,746 34,319 Long-term receivable - 800 Data libraries 75,273 80,256 Participation surveys in progress 11 192 Property and equipment 5,286 13,665 Investments 432 432 Deferred charges 180 218
$ 112,928 $ 129,882
Liabilities and Shareholders' Equity
Current liabilities: Accounts payable and accrued liabilities $ 5,052 $ 6,700 Deferred revenue 4,151 3,848 Current portion of long-term debt 5,868 6,068 Liabilities of discontinued operations 277 200 15,348 16,816
Long-term debt 17,872 20,772
Future income taxes 4,135 9,862
Shareholders' equity: Share capital 53,257 51,808 Contributed surplus 1,364 1,079 Retained earnings 20,952 29,545 75,573 82,432
$ 112,928 $ 129,882
PULSE DATA INC. Interim Consolidated Statements of Earnings (loss) and Retained Earnings
(In thousands of dollars, except per share data) (unaudited) Three months Six months ended June 30 ended June 30 2006 2005 2006 2005
Revenue $ 11,471 $ 10,657 $ 22,973 $ 22,792
Operating expenses: Amortization of data libraries 7,328 3,996 12,051 10,130 Operating 2,556 2,742 4,779 4,800 Depreciation and amortization 8,235 621 10,096 1,200 18,119 7,359 26,926 16,130
Gross margin (6,648) 3,298 (3,953) 6,662
General and administrative expenses 1,635 1,595 3,538 3,189 Research and development expenses 231 274 502 513
Interest: Long-term debt 439 243 859 470 Other (163) (24) (231) (63) 276 219 628 407
Earnings (loss) from continuing operations before income taxes (8,790) 1,210 (8,621) 2,553
Income taxes: Current 1,419 852 2,184 2,630 Future (reduction) (5,059) (373) (5,727) (1,611) (3,640) 479 (3,543) 1,019
Net earnings (loss) from continuing operations $ (5,150) $ 731 $ (5,078) $ 1,534
Earnings (loss) from discontinued operations, net of income taxes 36 (48) 3 (127)
Net earnings (loss) $ (5,114) $ 683 $ (5,075) $ 1,407
Retained earnings, beginning of period 27,834 26,678 29,545 26,527 Dividends paid (1,768) (577) (3,518) (1,150) Retained earnings, end of period $ 20,952 $ 26,784 $ 20,952 $ 26,784
Earnings (loss) per share from continuing operations, basic and diluted $ (0.11) $ 0.01 $ (0.11) $ 0.03
Earnings (loss) per share, basic and diluted $ (0.11) $ 0.01 $ (0.11) $ 0.03
PULSE DATA INC. Interim Consolidated Statements of Cash Flows (In thousands of dollars) (unaudited) Three months Six months ended June 30 ended June 30 2006 2005 2006 2005
Cash provided by (used in):
Continuing operations: Net earnings (loss) $ (5,150) $ 731 $ (5,078) $ 1,534 Items not involving cash: Amortization of data libraries 7,328 3,996 12,051 10,130 Depreciation and amortization 8,235 621 10,096 1,200 Unrealized loss (gain) on foreign exchange (112) 51 (74) 64 Future income taxes (reduction) (5,059) (373) (5,727) (1,611) Stock-based compensation 346 199 650 357 Other 17 (10) 36 (10) Funds from continuing operations 5,605 5,215 11,954 11,664 Net change in non-cash working capital items related to operations 3,230 (5,017) 10,363 (472) Increase (decrease) in non-current deferred revenue - 250 - 250 8,835 448 22,317 11,442
Discontinued operations: Funds from discontinued operations 70 (48) 35 (147) Net change in non-cash working capital items related to discontinued operations (998) 317 (776) 473
Increase (decrease) in cash position (928) 269 (741) 326
Financing: Long-term debt - 15,439 - 15,439 Repayment of long-term debt (1,523) (1,389) (3,100) (2,829) Issue of share capital 895 558 1,084 558 Dividends paid (1,768) (1,150) (3,518) (1,150) (2,396) 13,458 (5,534) 12,018