TSX: PSD
OTCQX: PLSDF
CALGARY, Nov. 7, 2014 /CNW/ - Pulse Seismic Inc. ("Pulse"
or "the Company") reports its financial and operating results for
the three and nine months ended September
30, 2014. The unaudited condensed consolidated interim
financial statements and MD&A will be filed on SEDAR
(www.sedar.com) and will be available on Pulse's website
(www.pulseseismic.com).
Pulse has declared a quarterly dividend of
$0.02 per common share. It will be
paid on December 18, 2014 to
shareholders of record at the close of business on December 4, 2014.
Pulse's key performance metrics of seismic data
library sales, cash EBITDA(a) and shareholder free cash
flow(a) each improved significantly in the three and
nine-month periods ended September 30,
2014 over the prior year's comparative periods. A
$10.3 million data library sale in
the third quarter was responsible for the improvement. Such revenue
fluctuations are a normal part of the seismic data library
business.
"Pulse's low fixed cost business model results
in substantial cash margins, which increase in higher revenue
quarters," commented Neal Coleman,
Pulse's President and CEO. "For the nine months ended September 30, 2014, 78 percent of the
$27.4 million of data library sales
converted to $21.3 million of
shareholder free cash flow, while for the third quarter alone, 86
percent of the $14.5 million in data
library sales generated $12.5 million
in shareholder free cash flow."
HIGHLIGHTS FOR THE THREE-MONTH AND NINE-MONTH
PERIODS ENDED SEPTEMBER 30,
2014
- Seismic data library sales for the third quarter of 2014 were
$14.5 million compared to
$4.2 million for the comparable
period in 2013. Seismic data library sales for the nine months
ended September 30, 2014 were
$27.4 million compared to
$22.5 million for the comparable
period in 2013.
- Total seismic revenue for the nine months ended September 30, 2014 was equal to the $27.4 million in data library sales, as no
participation surveys were in progress during the period. By
comparison, total seismic revenue for the comparable period in 2013
was $35.9 million and included
$13.4 million of participation survey
revenue.
- Cash EBITDA was $12.7 million
($0.21 per share basic and diluted)
for the third quarter of 2014 compared to $2.5 million ($0.04
per share basic and diluted) for the comparable period in 2013.
Cash EBITDA was $22.0 million
($0.37 per share basic and diluted)
for the nine months ended September 30,
2014 compared to $16.2 million
($0.27 per share basic and diluted)
for the nine months ended September 30,
2013.
- Shareholder free cash flow was $12.5
million ($0.21 per share basic
and diluted) for the third quarter of 2014 compared to $3.8 million ($0.06
per share basic and diluted) for the third quarter of 2013.
Shareholder free cash flow was $21.3
million ($0.36 per share basic
and diluted) for the nine months ended September 30, 2014 compared to $17.0 million ($0.28 per share basic and diluted) for the
comparable period in 2013.
- Net earnings of $5.1 million
(including non-cash amortization expense of $5.6 million) were realized in the third quarter
of 2014, bringing Pulse's net earnings for the nine months ended
September 30, 2014 to $2.7 million (including non-cash amortization
expense of $17.2 million). By
comparison, the net loss for the third quarter of 2013 was
$3.7 million (including non-cash
amortization expense of $7.1 million)
and the net loss for the nine months ended September 30, 2013 was $16.3 million (including non-cash amortization
expense of $49.4 million). Pulse's
high level of participation survey activity during the 2012/2013
winter season accounted for the high amortization expense in 2013.
Pulse recorded approximately $29.0
million of amortization in the first half of 2013 upon
completion of these surveys.
- Pulse paid a dividend of $0.02
per share in the third quarter of 2014, totalling $1.2 million.
- As of November 5, 2014 Pulse has
purchased and cancelled, through its normal course issuer bid,
1,452,413 common shares in 2014 at a total cost of approximately
$4.4 million, at an average cost of
$3.02 per share including
commissions. The number of shares outstanding has been reduced to
approximately 57.9 million.
- Pulse repaid $4.5 million in
long-term debt on the revolving credit facility in the third
quarter of 2014, bringing total repayments for the year to
$10.6 million. As of September 30, 2014 the principal balance is
$11.5 million and there is
$38.5 million available for future
draws.
- As of November 5, 2014 Pulse has
a net debt position of $5.0
million.
| Selected Financial and Operating
Information |
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| (thousands of dollars except per share
data, number of shares and seismic data coverage) |
|
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Three months ended |
Nine months
ended |
|
| |
September 30 |
September
30 |
Year
ended |
| |
2014 |
2013 |
2014 |
2013 |
December
31, |
| |
(unaudited) |
(unaudited) |
2013 |
| Revenue |
|
|
|
|
|
|
| |
Data library sales |
$ |
14,531 |
$ |
4,164 |
$ |
27,358 |
$ |
22,514 |
$ |
27,079 |
| |
Participation surveys |
|
- |
|
- |
|
- |
|
13,429 |
|
13,429 |
| Total revenue |
$ |
14,531 |
$ |
4,164 |
$ |
27,358 |
$ |
35,943 |
$ |
40,508 |
| |
|
|
|
|
|
|
| Amortization of seismic data
library |
$ |
5,554 |
$ |
7,090 |
$ |
17,228 |
$ |
49,404 |
$ |
55,619 |
| Net earnings (loss) |
$ |
5,086 |
$ |
(3,722) |
$ |
2,654 |
$ |
(16,262) |
$ |
(18,834) |
| |
Per share basic and diluted |
$ |
0.09 |
$ |
(0.06) |
$ |
0.04 |
$ |
(0.27) |
$ |
(0.31) |
| Cash EBITDA (a) |
$ |
12,724 |
$ |
2,544 |
$ |
21,954 |
$ |
16,183 |
$ |
19,145 |
| |
Per share basic and diluted (a) |
$ |
0.21 |
$ |
0.04 |
$ |
0.37 |
$ |
0.27 |
$ |
0.32 |
| Shareholder free cash flow
(a) |
$ |
12,547 |
$ |
3,807 |
$ |
21,343 |
$ |
17,027 |
$ |
20,682 |
| |
Per share basic and diluted (a) |
$ |
0.21 |
$ |
0.06 |
$ |
0.36 |
$ |
0.28 |
$ |
0.34 |
| Funds from operations
(b) |
$ |
12,590 |
$ |
2,326 |
$ |
24,997 |
$ |
25,015 |
$ |
27,751 |
| |
Per share basic and diluted (b) |
$ |
0.21 |
$ |
0.04 |
$ |
0.42 |
$ |
0.41 |
$ |
0.46 |
| Capital expenditures |
|
|
|
|
|
|
|
|
|
|
| |
Participation surveys |
$ |
- |
$ |
117 |
$ |
- |
$ |
21,332 |
$ |
21,265 |
| |
Seismic data purchases & related costs |
|
183 |
|
190 |
|
550 |
|
778 |
|
961 |
| |
Property and equipment additions |
|
- |
|
19 |
|
21 |
|
168 |
|
127 |
| Total capital expenditures |
$ |
183 |
$ |
326 |
$ |
571 |
$ |
22,278 |
$ |
22,353 |
| Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
|
|
| |
Basic and diluted |
|
59,314,120 |
|
60,085,561 |
|
59,324,779 |
|
60,566,261 |
|
60,280,876 |
| Shares outstanding at period-end
|
|
|
|
|
|
59,314,120 |
|
59,687,520 |
|
59,349,120 |
| |
|
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| Seismic library data |
|
|
|
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|
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|
2D in kilometres |
|
|
|
|
|
339,991 |
|
339,991 |
|
339,991 |
| |
3D in square kilometres |
|
|
|
|
|
28,284 |
|
28,284 |
|
28,284 |
| |
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| Financial Position and
Ratios |
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| (thousands of dollars except ratio
calculations) |
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| |
|
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|
September 30, |
|
September 30, |
|
December 31, |
| |
|
|
|
|
|
2014 |
|
2013 |
|
2013 |
| Working capital |
|
|
|
|
$ |
12,396 |
$ |
4,295 |
$ |
6,476 |
| Working capital ratio |
|
|
|
|
|
5.19:1 |
|
1.95:1 |
|
3.71:1 |
| Total assets |
|
|
|
|
$ |
87,655 |
$ |
104,188 |
$ |
98,017 |
| Total debt (c) |
|
|
|
|
$ |
11,500 |
$ |
21,100 |
$ |
22,100 |
| TTM cash EBITDA (d) |
|
|
|
|
$ |
24,916 |
$ |
25,920 |
$ |
19,145 |
| Shareholders' equity |
|
|
|
|
$ |
64,782 |
$ |
70,947 |
$ |
65,962 |
| Total debt to equity ratio |
|
|
|
|
|
0.18:1 |
|
0.30:1 |
|
0.34:1 |
| Total debt to TTM cash
EBITDA ratio |
|
|
|
|
|
0.46:1 |
|
0.81:1 |
|
1.15:1 |
| (a) The Company's continuous disclosure documents
provide discussion and analysis of "cash EBITDA", "cash EBITDA per
share", "shareholder free cash flow" and "shareholder free cash
flow per share". These financial measures do not have standard
definitions prescribed by IFRS 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
cash EBITDA is cash available for interest payments, cash taxes if
applicable, debt servicing, discretionary capital expenditures and
the payment of dividends, and is calculated as earnings (loss) from
operations before interest, taxes, depreciation and amortization
less participation survey revenue, plus any non-cash and
non-recurring expenses. Cash EBITDA excludes participation
survey revenue as these funds are directly used to fund
specific participation surveys and this revenue is not available
for discretionary capital expenditures. The Company believes cash
EBITDA assists investors in comparing Pulse's results on a
consistent basis without regard to participation survey revenue and
non-cash items, such as depreciation and amortization, which can
vary significantly depending on accounting methods or non-operating
factors such as historical cost. Cash EBITDA per share is defined
as cash EBITDA divided by the weighted average number of shares
outstanding for the period. Shareholder free cash flow further
refines the calculation of capital available to invest in growing
the Company's 3D and 2D seismic data library, to repay debt, to
purchase its common shares and to pay dividends by deducting
non-discretionary expenditures from cash EBITDA. Non-discretionary
expenditures are defined as debt financing costs (net of deferred
financing expenses amortized in the current period) and current tax
provisions. Shareholder free cash flow per share is defined as
shareholder free cash flow divided by the weighted average number
of shares outstanding for the period. |
| |
| (b) Funds from operations is an additional GAAP
measure. Funds from operations is defined as cash provided by
operations as prescribed by IFRS, excluding the impact of changes
in non-cash working capital. Funds from operations represents the
cash that was generated during the period, regardless of the timing
of collection of receivables and payment of payables. Funds from
operations per share is defined as funds from operations divided by
the weighted average number of shares outstanding for the
period. |
| |
| (c) Total debt is defined as long-term debt,
including current portion, excluding deferred financing costs. |
| |
| (d) TTM cash EBITDA is defined as the sum of the
trailing 12 month's cash EBITDA and is used to provide a comparable
annualized measure. |
OUTLOOK
Pulse's third quarter and nine-month results include the
Company's highest quarterly data library sales since the first
quarter of 2012, with nine-month data library sales exceeding data
library sales for all of 2013.
These results:
- Substantiate Pulse's view that large seismic data library sales
can happen at any time. The large sale in the third quarter marks
the fourth year in the past five in which Pulse has had a
significant sale that materially increased revenue in an otherwise
weak period;
- Demonstrate the quality and suitability of Pulse's seismic data
to service the current focus areas of oil and natural gas drilling
activity in western Canada;
- Show once again that the business value or cash-generating
ability of Pulse's high-quality seismic data is unrelated to its
book value, level of amortization or vintage; and
- Underscore the importance of maintaining a strong balance sheet
and low cost structure, so that any substantial sale adds
materially not only to revenue but to cash EBITDA and shareholder
free cash flow for the period.
The results so far this year further strengthen the Pulse
management team's confidence that the Company has the right
business model for long-term success.
Given the unpredictability of seismic data library sales,
however, Pulse's outlook for the remainder of 2014 and 2015 remains
cautious. Traditional leading indicators of future seismic sales
remain weak and somewhat uncertain:
- Crude oil prices have weakened considerably in recent
weeks;
- The intra-Alberta natural gas
spot price has eased, falling into the range of $3.50 per GJ as of late October;
- The previous strengthening of natural gas prices was not
sufficient to revive "dry" gas drilling or vertical conventional
gas drilling;
- According to the Canadian Association of Oilwell Drilling
Contractors, drilling rig utilization in September 2014 was approximately equal to
September 2013;
- So far this year, merger and acquisitions-related activity in
the oil and gas producing sector has exceeded 2013, a weak year;
and
- Although industry optimism regarding development of liquefied
natural gas export facilities remains strong, serious risks remain
and the time-horizon to first exports will clearly be a number of
years.
Given these conditions, Pulse will continue to prudently manage
costs and capital allocation and remain focused on generating
returns for shareholders.
CORPORATE PROFILE
Pulse is a market leader in the acquisition,
marketing and licensing of 2D and 3D seismic data to the western
Canadian energy sector. Pulse owns the second-largest licensable
seismic data library in Canada,
currently consisting of approximately 28,300 net square kilometres
of 3D seismic and 340,000 net kilometres of 2D seismic. The library
extensively covers the Western Canada Sedimentary Basin where most
of Canada's oil and natural gas
exploration and development occur.
Forward Looking Information
This news release contains information that
constitutes "forward looking information" or "forward looking
statements" (collectively, "forward looking information") within
the meaning of applicable securities legislation;
- Pulse's outlook for the remainder of 2014 and 2015 remains
cautious;
- Traditional leading indicators of future seismic sales remain
weak and somewhat uncertain;
- General economic and industry outlook;
- Industry activity levels and capital spending;
- Forecast commodity prices;
- Forecast oil and natural gas drilling activity;
- Forecast oil and natural gas company capital budgets;
- Estimated future demand for seismic data;
- Estimated future seismic data sales;
- Estimated future demand for participation surveys;
- Pulse's dividend policy;
- Pulse's business and growth strategy; and
- Other expectations, beliefs, plans, goals, objectives,
assumptions, information and statements about possible future
events, conditions, results and performance.
Undue reliance should not be placed on
forward-looking information. Forward looking information is based
upon current expectations, estimates and projections that involve a
number of risks and uncertainties which could cause actual results
to vary and in some instances to differ materially from those
anticipated in the forward looking information. Pulse does
not publish specific financial goals or otherwise provide guidance,
due to the inherently unclear visibility of seismic revenue.
The material risk factors that could cause
actual results to differ materially from the forward-looking
information include, but are not limited to:
- Oil and natural gas prices;
- Seismic industry cycles and seasonality;
- The demand for seismic data and participation surveys;
- The pricing of data library licensing sales;
- Relicensing (change of control) fees and partner copy
sales;
- The level of pre-funding of participation surveys, and the
Company's ability to make subsequent data
library sales from such participation
surveys;
- The Company's ability to complete participation surveys on time
and within budget;
- Environmental, health and safety risks;
- The effect of seasonality and weather on participation
surveys;
- Federal and provincial government laws and regulations,
including those pertaining to taxation, royalty rates,
environmental protection and safety;
- Competition;
- Dependence on qualified seismic field contractors;
- Dependence on key management, operations and marketing
personnel;
- The loss of seismic data;
- Protection of intellectual property rights; and
- The introduction of new products.
The foregoing list of risks is not exhaustive.
Additional information on these risks and other factors which could
affect the Company's operations or financial results are included
in the Risk Factors section of the Company's MD&A for the most
recent calendar year and interim periods. Forward looking
information is based upon the assumptions, expectations, estimates
and opinions of the Company's management at the time the
information is presented.
SOURCE Pulse Seismic Inc.