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CALGARY, Alberta, July 18, 2019 (GLOBE NEWSWIRE) -- Pulse Seismic Inc. (TSX:PSD) (OTCQX:PLSDF) (“Pulse” or “the Company”) is pleased to report its financial and operating results for the three and six months ended June 30, 2019. The unaudited condensed consolidated interim financial statements, accompanying notes and MD&A are being filed on SEDAR (www.sedar.com) and will be available on Pulse’s website at www.pulseseismic.com.
HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019
As reported in previous filings concerning the Seitel acquisition, in addition to the purchase price of $58.6 million, Pulse assumed various future liabilities that are viewed by the Company as being a part of the total cost of the acquisition. These estimated $4.2 million of costs are being expensed over time, with a large percentage occurring in the first year, including $2.2 million in the first half of 2019. These non-recurring expenses are categorized as restructuring costs and are being added back to the Company’s cash EBITDA and shareholder free cash flow.
SELECTED FINANCIAL AND OPERATING INFORMATION
|(thousands of dollars except per share data,||Three months ended June 30,||Six months ended June 30,||Year ended|
|numbers of shares and kilometres of seismic data)||2019||2018||2019||2018||December 31,|
|Data library sales||10,617||1,905||15,894||4,193||10,076|
|Amortization of seismic data library||3,577||1,836||7,143||3,714||7,337|
|Net earnings (loss)||2,880||(1,016)||209||(1,712)||(1,730)|
|Per share basic and diluted||0.05||(0.02)||0.00||(0.03)||(0.03)|
|Cash provided by operating activities||3,691||213||5,149||(8,379)||(3,250)|
|Per share basic and diluted||0.07||0.00||0.10||(0.16)||(0.06)|
|Cash EBITDA (a)||9,256||482||12,353||1,416||5,037|
|Per share basic and diluted (a)||0.17||0.01||0.23||0.03||0.09|
|Shareholder free cash flow (a)||6,852||630||9,552||1,510||4,671|
|Per share basic and diluted (a)||0.13||0.01||0.18||0.03||0.09|
|Seismic data purchases, digitization and related costs||-||-||61,029||62||62|
|Property and equipment||63||2||398||4||18|
|Total capital expenditures||63||2||61,427||66||80|
Weighted average shares outstanding
|Basic and diluted||53,793,317||53,850,917||53,793,317||53,868,998||53,838,106|
|Shares outstanding at period-end||53,793,317||53,850,917||53,793,317|
|2D in kilometres||829,207||450,000||450,000|
|3D in square kilometres||65,310||28,956||28,956|
|FINANCIAL POSITION AND RATIOS|
|June 30,||June 30,||December 31,|
|(thousands of dollars except ratios)||2019||2018||2018|
|Working capital (deficit)||(2,282 )||22,586||25,804|
|Working capital ratio||0.8:1||15:1||15:1|
|Cash and cash equivalents||464||18,040||23,016|
|Long-term debt to equity ratio||0.84||-||-|
(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, repayment of debt, purchase of its shares, 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, if applicable, 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 2D and 3D 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.
These non-GAAP financial measures are defined, calculated and reconciled to the nearest GAAP financial measures in the Management's Discussion and Analysis.
Pulse experienced a strong first half of the year. Seismic data sales of $15.9 million were equivalent to 156 percent of Pulse’s full-year 2018 sales and 110 percent of full-year 2018 sales from both Pulse’s and Seitel’s datasets. With significant second-quarter sales generated from the former Seitel data library, the second quarter strengthened the Company’s confidence that the Seitel acquisition was capable of doubling Pulse’s baseline seismic data library sales (all other things being equal).
In short, Pulse’s business case for the acquisition is being validated. The Company is also pleased that strong first-half sales were more than sufficient to complete the sales-based deferred payment to the vendor of $5 million.
Pulse is, however, maintaining a cautious outlook for the rest of 2019 and the opening quarters of 2020. While some industry indicators have been strengthening, others remain weak or unresolved. Key items:
Western Canada’s oil and natural gas sector continues to face economic headwinds and uncertainty. In addition, Pulse is likely to experience a delay before any renewed industry investment and activity translate into higher seismic data sales. The Company is, accordingly, prepared for additional quarters of weak traditional sales while also cautioning that there is no visibility as to transaction-based sales.
Pulse’s management team remains pleased with the Company’s cost structure and financial position, and confident in its ability to pay down debt at the schedule and rate specified. The Seitel acquisition financing structure enables Pulse to comfortably meet its obligations. The low cost structure of Pulse’s business model facilitates significant synergies on future sales.
The Company has been structured to survive and even grow through all phases of the industry cycle. Throughout 2019, Pulse intends to pay down debt, continue to manage costs conservatively and remain stringent in assessing potential new opportunities. Pulse has unused borrowing capacity of up to a further $24.6 million if needed.
As Canada’s largest pure-play seismic data library provider, Pulse’s sales are highly scalable without either capital investment or higher operating costs, and a transaction-based sale of any size could occur at any time. The Company’s low-cost structure and the broad coverage of its seismic database make Pulse’s revenue, cash margin and shareholder free cash flow highly levered to any uptick in industry field activity and demand for seismic data amidst a longer-term recovery in western Canada’s oil and natural gas sector.
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 largest licensable seismic data library in Canada, currently consisting of approximately 65,310 square kilometres of 3D seismic and 829,207 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.
For further information, please contact:
Neal Coleman, President and CEO
Pamela Wicks, Vice President Finance and CFO
Please visit our website at www.pulseseismic.com
This document contains information that constitutes “forward-looking information” or “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities legislation.
The Outlook section contains forward-looking information which includes, among other things, statements regarding:
Undue reliance should not be placed on forward-looking information. Forward-looking information is based on 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 poor visibility of seismic revenue.
The material risk factors include, without limitation:
The foregoing list is not exhaustive. Additional information on these risks and other factors which could affect the Company’s operations and financial results is included under “Risk Factors” of the Company’s MD&A for the year ended December 31, 2018. Forward-looking information is based on the assumptions, expectations, estimates and opinions of the Company’s management at the time the information is presented.
A PDF accompanying this announcement is available at: