Pulse Seismic Inc. press release
Pulse Data Inc. reports Q1 2007 results and Declaration of quarterly dividend
TSX - Toronto Stock Exchange ยท Canada
TSX Symbol - PSD
CALGARY, May 10 /CNW/ - Mr. Ken MacDonald, President and Chief Executive Officer of Pulse Data Inc. ("Pulse" or "the Company") reports the financial and operating results of Pulse for the three months ended March 31, 2007.
Mr. MacDonald is also pleased to announce that Pulse has declared its sixteenth consecutive quarterly dividend. This dividend is $0.0375 per common share and will be paid on June 20, 2007 to shareholders of record at the close of business on June 6, 2007. The Company's Dividend Reinvestment Plan for eligible shareholders will be available for this dividend.
HIGHLIGHTS
Record first quarter data library sales: Seismic data library sales increased by 5.2 percent to $10.6 million for the three months ended March 31, 2007 compared to $10.1 million for the first quarter of 2006. Record first quarter free cash flow(b) was also achieved for Q1, 2007 at $7.9 million, compared to $6.9 in the first quarter of 2006, representing a 13.3 percent increase year-over-year. Pulse had a working capital position of $5.6 million (including cash of $9.2 million) at March 31, 2007 compared to $5.7 million at December 31, 2006 and $20.1 million at March 31, 2006. Pulse's $36.8 million investment to acquire new seismic data in 2006 has led to higher amortization expense which increased to $6.3 million for the three months ended March 31, 2007 compared to $4.7 million for the first quarter of 2006. On March 5, 2007 the Company announced that it was initiating a process to review strategic alternatives for its LiDAR business unit. Since then, the Corporation has developed a formal plan to dispose of the assets and business operations of its LiDAR business unit.
Financial Highlights ($000s except per share data)
3 months ended Year ended March 31, December 31, 2007 2006 2006 (unaudited) (audited) Revenue from continuing operations: Data library sales $ 10,623 $ 10,098 $ 34,214 Participation surveys $ - $ - $ 3,058 Corporate & other $ - $ - $ (130) Total revenue from continuing operations $ 10,623 $ 10,098 $ 37,142 Amortization of seismic data library $ 6,288 $ 4,679 $ 22,574 Net earnings from continuing ops $ 837 $ 1,452 $ 3,474 Net earnings from continuing ops per share: Basic and diluted $ 0.02 $ 0.03 $ 0.07 Net earning (loss) $ (470) $ 39 $ (3,290) Net earnings (loss) per share: Basic and diluted $ (0.01)(a) $ 0.00 $ (0.07)(a) Funds from operations(b) $ 7,850 $ 6,834 $ 25,851 Funds from operations per share(b): Basic $ 0.16 $ 0.15 $ 0.55 Diluted $ 0.16 $ 0.14 $ 0.54 Free cash flow(b) $ 7,850 $ 6,928 $ 19,155 Working capital $ 5,619 $ 20,075 $ 5,681 Total assets $ 126,682 $ 125,877 $ 131,910 Capital expenditures: Seismic data purchases $ - $ - $ 36,850 Participation surveys $ - $ (94) $ 6,696 Change to work in progress $ - $ 932 $ (192) Property & equipment additions $ 74 $ 52 $ 128 Total capital expenditures $ 74 $ 890 $ 43,482 Long-term debt (net of current maturities) $ 29,447 $ 19,322 $ 31,996 Shareholders' equity $ 73,640 $ 81,214 $ 75,357 Weighted average shares outstanding: Basic 47,929,831 46,612,473 47,145,373 Diluted 48,372,833 47,687,104 48,007,006 Shares outstanding at period end 47,935,342 46,676,444 47,919,342
(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
Seismic library: 2D in net kilometres 257,216 239,822 257,216 3D in net square kilometres 9,823 9,442 9,823
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, 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 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
On March 5, 2007 the Company announced that it was initiating a process to review strategic alternative for its LiDAR business unit. Since then, the Company has developed a formal plan to dispose of the LiDAR business segment. Two wholly-owned subsidiaries of Pulse, Terrapoint Canada Inc. and Terrapoint USA Inc. are therefore categorized as assets held for sale in the March 31, 2007 financial statements, as required by Canadian GAAP.
Free cash flow for the first quarter of 2007 was $7.9 million, compared to free cash flow of $6.9 million reported for the first quarter of 2006. This 13.3 percent period-over-period increase in free cash flow is attributable to higher data library revenue, along with lower G&A expenses, operating costs and current taxes in 2007 compared to the same period in 2006.
Pulse had a working capital position of $5.6 million (including cash of $9.2 million) at March 31, 2007 compared to $20.1 million at March 31, 2006 and $5.7 million at December 31, 2006.
The net earnings from continuing operations for the three months ended March 31, 2007 was $837,000 ($0.02 per share basic and diluted), compared to net earnings from continuing operations of $1.5 million ($0.03 per share basic and diluted) for the same period in 2006. The primary reasons for the reduction in net earnings from continuing operations are the significant increase in seismic data library amortization expense and the higher interest expense for the quarter.
The net loss for the quarter ended March 31, 2007 was $470,000 ($0.01 per share basic and diluted) compared to net earnings of $39,000 ($0.00 per share basic and diluted) for the first quarter of 2006. When calculating the loss per share for the quarter ended March 31, 2007, the basic number of shares outstanding for this period has been utilized, as using diluted shares would have the effect of inappropriately reducing the net loss per share.
Funds from operations for the quarter ended March 31, 2007 totalled $7.9 million ($0.16 per share basic and diluted), compared to $6.8 million ($0.15 per share basic and $0.14 per share diluted) generated for the three-months ended March 31, 2006. The funds from operations per share for 2007 and 2006 are based on the weighted average shares outstanding of 47,929,831 (diluted - 48,372,833) for 2007, compared to 46,612,473 (diluted - 47,687,104) for 2006.
Revenue
The seismic data segment includes data library sales and participation survey revenues, however there were no participation surveys completed in the first quarter of 2007 or 2006. Pulse achieved record first quarter data library sales for the three months ended March 31, 2007, with seismic data library sales reaching $10.6 million, compared to $10.1 million for the same period in 2006, an increase of 5.2 percent. This increase was due in part to a higher demand for seismic data for exploration from exploration and development companies, along with the addition of revenue generated from the newly acquired Foothills 2D dataset which Pulse purchased in November 2006, and a general price increase for data library licences effective January 1, 2007.
Data Library
Pulse acquires seismic data to grow its data library through two primary methods. The Company conducts participation surveys each year and also purchases proprietary rights to complementary seismic data sets when the opportunity arises. During the first three months of 2007, Pulse did not acquire any additional seismic data, and did not complete any participation survey programs. During the first three months of 2006 the Company was at work on a 237-square-kilometre 3D participation survey in west-central Alberta, valued at $6.7 million, which was subsequently completed in the second quarter of 2006.
Liquidity, Capital Resources and Capital Requirements
At March 31, 2007 the working capital position of Pulse, including the current portion of long-term debt of $8.0 million, was $5.6 million, compared to $5.7 million at December 31, 2006. For the three months ended March 31, 2007 Pulse generated $7.9 million in cash flow from operations, had a net change of $4.2 million in non-cash working capital items and utilized working capital for long-term debt repayment ($2.0 million) and to finance its LiDAR operations ($3.0 million). This resulted in an increase of $7.1 million to the cash balance of $9.2 million at March 31, 2007.
With the continued trend of strong seismic data sales, Pulse management expects that its funds from operations will be sufficient to finance operations, service debt, and carry out the budgeted capital expenditures through 2007. 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. Utilizing the recent technological advancements in data reprocessing, the Company's clients are able to enhance the quality of older data in the library.
PULSE DATA INC. Interim Consolidated Balance Sheets (In thousands of dollars) (unaudited)
March 31 December 31 2007 2006
Assets Current assets: Cash and cash equivalents $ 9,213 $ 2,181 Accounts receivable 8,710 16,191 Prepaid expenses 185 233 Assets held for sale 2,822 3,809 20,930 22,414
Seismic data library 94,400 100,688 Assets held for sale 9,707 6,943 Property and equipment 907 904 Investments 687 351 Deferred charges - 610 Other 51 - $ 126,682 $ 131,910
Liabilities and Shareholders' Equity
Current liabilities: Accounts payable and accrued liabilities $ 3,799 $ 4,002 Deferred revenue 2,476 3,781 Current portion of long-term debt 8,004 8,004 Liabilities held for sale 1,032 946 15,311 16,733
Long-term debt 29,447 31,996 Future income taxes 8,284 7,824
Shareholders' equity: Share capital 54,912 54,887 Contributed surplus 1,509 1,305 Retained earnings 17,219 19,165 73,640 75,357 $ 126,682 $ 131,910
PULSE DATA INC. Interim Consolidated Statements of Earnings and Retained Earnings
Three months ended March 31, (In thousands of dollars, except per share data)(unaudited) 2007 2006
Revenue $ 10,623 $ 10,098
Expenses:
Amortization of seismic data library 6,288 4,679 Operating 802 969 Depreciation and amortization 71 93 Unrealized loss on assets held for trading 48 - General and administrative expenses 1,446 1,550 Interest: Long-term debt 742 420 Other (78) (79) 664 341
Earnings from continuing operations before income taxes 1,304 2,466
Income taxes: Current 69 765 Future 398 249 467 1,014
Net earnings from continuing operations $ 837 $ 1,452 Loss from discontinued operations, net of income taxes $ (1,307) $ (1,413) Net earnings (loss) $ (470) $ 39 Retained earnings, beginning of period $ 19,165 $ 29,545
Change in accounting policy 322 - Dividends declared (1,798) (1,750) Retained earnings, end of period $ 17,219 $ 27,834
Earnings per share from continuing operations, basic and diluted $ 0.02 $ 0.03 Earnings (loss) per share, basic and diluted $ (0.01) $ 0.00
PULSE DATA INC. Interim Consolidated Statements of Cash Flows
Three months ended March 31, (In thousands of dollars)(unaudited) 2007 2006
Cash provided by (used in):
Operations: Net earnings $ 837 $ 1,452 Items not involving cash: Amortization of seismic data library 6,288 4,679 Depreciation and amortization 71 93 Unrealized loss on foreign exchange (37) 38 Unrealized loss on assets held for trading 48 - Future income taxes 398 249 Stock-based compensation 208 304 Other 37 19 7,850 6,834 Net change in non-cash working capital items related to operations 4,235 3,753 12,085 10,587 Discontinued Operations:
Funds from discontinued operations (1,687) (519) Additions to property and equipment (2,385) (96) Net-change in non-cash working capital items related to discontinued operations 1,073 346 (2,999) (269) Financing: Repayment of long-term debt (2,001) (1,576) Issue of share capital 21 189 (1,980) (1,387) Investing: Additions to data library through participation surveys - 94 (Increase) decrease in participation surveys in progress - (932) Additions to property and equipment (74) (52) Net change in non-cash working capital items related to investing - (491) (74) (1,381)
Increase in cash position 7,032 7,550 Cash and cash equivalents, beginning of period 2,181 10,540
Cash and cash equivalents, end of period $ 9,213 $ 18,090
During the first quarter of the year the Corporation paid interest of $779,000 (2006 - $350,000) and received interest of $90,000 (2006 - $82,000). During the first quarter of the year the Corporation paid income taxes of $1,441,000 (2006 - $225,000).
OUTLOOK
Pulse's record first quarter results were in line with the Company's expectations. The second quarter commenced at a somewhat slower pace, but activity picked up in late April and early May with a number of important new sales putting us on track for Q2, 2007 budgeted seismic data library sales. Our working capital position is solid, with an increase of $7.0 million in cash on hand quarter-over-quarter.
The second quarter for Pulse is historically more volatile than the first; some years it is quite weak, while in others it's even stronger than the first quarter. This year, uncertainty within the oil and natural gas industry concerning commodity prices and the pace of field activity over the coming year appears to be translating into some decision-making hesitancy regarding exploration-related activities, including seismic purchases.
Pulse continues to benefit from the seismic sector's position within the overall service industry's price and activity dynamic. Because spending on seismic data represents a small proportion of producers' capital budgets, and because seismic interpretation remains key to producers' longer-term growth and success, spending on seismic data tends not to move in lockstep with commodity prices and drilling rates. This tends to insulate seismic providers at least partially from price-driven industry volatility.
Pulse continues to foresee reasonable levels of licensing activity, revenue, operating margin and free cash flow in the months ahead. We are cautious concerning activity in the latter half of the second quarter and the third quarter, and optimistic about a strong finish to 2007 in the fourth quarter. We will maintain our overall philosophy of acquiring seismic data in whichever way is most efficient and expedient, whether through acquisition of additional existing data sets or through further participation surveys. Pulse will continue to evaluate strategic alternatives for the LiDAR segment, as a financial advisor has been engaged to assist in the disposition of Terrapoint, a data room has been established, and to date, nine companies have executed Confidentiality Agreements.
CORPORATE PROFILE
Pulse is a Calgary-based company with two operating units: Pulse Seismic which specializes in acquiring, marketing and licensing seismic data to the western Canadian energy sector, and Terrapoint which focuses on acquisitions and processing of digital elevation and image data (also referred to as LiDAR) to diverse markets. Through these two operating units, Pulse Seismic and Terrapoint, the Company has evolved into an industry leader providing Better Information Faster(TM).
Pulse trades on the Toronto Stock Exchange under the symbol PSD.
Certain information contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Investors are encouraged to review the "Risk Factors" section of the Management's Discussion and Analysis in the Company's 2006 Annual Report and the 2007 interim report for a discussion of risks that could affect the Company's operations and financial results. Forward-looking statements are based upon management's assumptions, expectations and estimates at the time that such statements are made. Pulse does not update forward-looking statements should circumstances change or management's assumptions, expectations or estimates change, except as required by law.