HOUSTON--(BUSINESS WIRE)--Seitel, Inc., a leading provider of seismic data to the oil and gas industry, today reported results for the first quarter ended March 31, 2013.
Total revenue for the first quarter of 2013 was $51.4 million compared to $72.5 million in the first quarter of 2012. Acquisition underwriting revenue was $25.1 million in the first quarter of 2013 compared to $36.6 million in the same period in 2012. The decrease between quarters was primarily due to a reduction in data acquisition activity as we made a strategic decision to reduce our level of investment on new data creation projects for 2013 as compared to 2012 and 2011 which directly impacts acquisition underwriting revenue. The majority of new data acquisition activity in the first quarter of 2013 occurred in the Eagle Ford and Utica/Marcellus unconventional plays, with the Granite Wash (Panhandle Plays) and Cardium contributing as well. Total resale licensing revenue was $24.8 million in the first quarter of 2013 compared to $34.7 million in the same period last year. Cash resales in the first quarter of 2013 were $22.4 million compared to cash resales in the first quarter of 2012 of $39.2 million. Cash resale activity is tied closely to our clients' annual budget cycles and therefore is better viewed on an annual basis. As a result, cash resale activity can fluctuate significantly from quarter to quarter and, in the first quarter of 2013, we saw that our customers had a slow start in spending their current year budgets. Solutions revenue was $1.4 million compared to $1.3 million in the same period last year.
"Client activity in unconventional plays continues to be strong and we are seeing renewed interest in conventional areas. As a result, our outlook for the full year remains positive and unchanged even though cash resale activity can be uneven quarter to quarter as we experienced in 2012," commented Rob Monson, president and chief executive officer. "Opportunities for acquiring new seismic data are robust allowing us to be selective in choosing new surveys to add to our data library."
For the first quarter of 2013, our net income was $1.7 million compared to a $14.7 million for the same period last year. The reduction in net income was primarily due to the lower level of revenue partially offset by a reduction in amortization expense associated with our data library. The first quarter of 2013 also included a $1.5 million non-cash charge related to the early extinguishment of our senior notes due 2014 as well as additional interest paid upon the satisfaction and discharge of these notes in the first quarter.
Cash EBITDA, generally defined as cash resales and solutions revenue less cash operating expenses (excluding various non-recurring items), was $16.7 million in the first quarter of 2013 compared to $32.7 million in the same period of 2012. For the last twelve months ended March 31, 2013, our cash EBITDA was $99.3 million.
Selling, general and administrative (“SG&A”) expenses were $7.4 million for the first quarter of 2013 compared to $8.1 million last year. The decrease between periods was primarily due to a reduction in variable compensation.
In March 2013, we issued $250.0 million senior unsecured notes due 2019 and used the proceeds, together with $29.8 million cash on hand, to satisfy and discharge our $275.0 million senior notes due 2014, including accrued interest of $4.8 million, further delevering our balance sheet.
Our 2013 investment campaign is currently set at $60.0 million of net cash capital expenditures. We believe this is a good level to continue to grow our data library and allow us to generate free cash flow. Our net cash capital expenditures totaled $19.0 million in the first quarter with gross capital expenditures of $46.7 million, of which $41.8 million related to new data acquisition. Our underwriting revenue during the first quarter of 2013 was 60% of the gross investment. Our forecast of net cash capital expenditures for the remainder of 2013 is $41.0 million. Our current backlog of net cash capital expenditures related to acquisition programs is $21.2 million, of which we expect the majority to be incurred in 2013.
ABOUT SEITEL
Seitel is a leading provider of onshore seismic data to the oil and gas industry in North America. Seitel's data products and services are critical for the exploration for and development of oil and gas reserves by oil and gas companies. Seitel has ownership in an extensive library of proprietary onshore and offshore seismic data that it has accumulated since 1982 and that it licenses to a wide range of oil and gas companies. Seitel believes that its library of 3D onshore seismic data is the largest available for licensing in North America and includes leading positions in oil and liquids-rich unconventional plays. Seitel has ownership in over 38,000 square miles of 3D onshore data, over 10,000 square miles of 3D offshore data and approximately 1.1 million linear miles of 2D seismic data concentrated in the major active North American oil and gas producing regions. Seitel serves a market which includes over 1,600 companies in the oil and gas industry.
The press release contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “expect,” “anticipate,” “estimate,” “project,” “propose,” “plan,” “target,” “foresee,” “should,” “intend,” “may,” “will,” “would,” “could,” “potential” or similar expressions that concern the strategy, plans or intentions of the Company. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, actual results may differ materially from management expectations reflected in our forward-looking statements. These risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, a copy of which may be obtained from the Company without charge. Management undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
The press release also includes certain non-GAAP financial measures as defined under the SEC rules. Non-GAAP financial measures include cash resales, for which the most comparable GAAP measure is total revenue; cash EBITDA, for which the most comparable GAAP measure is net income; net cash capital expenditures, for which the most comparable GAAP measure is total capital expenditures; and cash operating expenses for which the most comparable GAAP measure is total operating expenses.
(Tables to follow)
|
SEITEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts) |
|||||||||||
| (Unaudited) | |||||||||||
|
March 31, |
December 31, |
||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 25,544 | $ | 61,891 | |||||||
| Receivables, net | 46,816 | 64,212 | |||||||||
| Net seismic data library | 197,221 | 180,117 | |||||||||
| Net property and equipment | 4,651 | 4,818 | |||||||||
| Prepaid expenses, deferred charges and other | 11,040 | 10,774 | |||||||||
| Intangible assets, net | 19,255 | 20,828 | |||||||||
| Goodwill | 205,974 | 208,020 | |||||||||
| Deferred income taxes | 84 | 84 | |||||||||
| TOTAL ASSETS | $ | 510,585 | $ | 550,744 | |||||||
| LIABILITIES AND STOCKHOLDER'S EQUITY | |||||||||||
| LIABILITIES | |||||||||||
| Accounts payable and accrued liabilities | $ | 53,122 | $ | 62,783 | |||||||
| Income taxes payable | 972 | 4,134 | |||||||||
| Debt: | |||||||||||
| Senior Notes | 250,000 | 275,000 | |||||||||
| Notes payable | 12 | 29 | |||||||||
| Obligations under capital leases | 2,990 | 3,113 | |||||||||
| Deferred revenue | 51,348 | 52,857 | |||||||||
| Deferred income taxes | 2,896 | 2,470 | |||||||||
| TOTAL LIABILITIES | 361,340 | 400,386 | |||||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||||
| STOCKHOLDER'S EQUITY | |||||||||||
| Common stock, par value $.001 per share; 100 shares authorized, | |||||||||||
| issued and outstanding at March 31, 2013 and December 31, 2012 |
- |
- |
|||||||||
| Additional paid-in capital | 398,998 | 398,772 | |||||||||
| Retained deficit | (270,397 | ) | (272,135 | ) | |||||||
| Accumulated other comprehensive income | 20,644 | 23,721 | |||||||||
| TOTAL STOCKHOLDER'S EQUITY | 149,245 | 150,358 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $ | 510,585 | $ | 550,744 | |||||||
|
SEITEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands) |
||||||||||
|
Three Months Ended March 31, |
||||||||||
| 2013 | 2012 | |||||||||
| REVENUE | $ | 51,351 | $ | 72,547 | ||||||
| EXPENSES: | ||||||||||
| Depreciation and amortization | 29,338 | 39,384 | ||||||||
| Cost of sales | 39 | 97 | ||||||||
| Selling, general and administrative | 7,387 | 8,092 | ||||||||
| 36,764 | 47,573 | |||||||||
| INCOME FROM OPERATIONS | 14,587 | 24,974 | ||||||||
| Interest expense, net | (9,315 | ) | (7,219 | ) | ||||||
| Foreign currency exchange gains (losses) | (647 | ) | 411 | |||||||
| Loss on early extinguishment of debt | (1,504 | ) |
- |
|||||||
| Other income | 1 | 81 | ||||||||
| Income before income taxes | 3,122 | 18,247 | ||||||||
| Provision for income taxes | 1,384 | 3,541 | ||||||||
| NET INCOME | $ | 1,738 | $ | 14,706 | ||||||
Cash resales represent new contracts for data licenses from our library, including data currently in progress, payable in cash. We believe this measure is important in assessing overall industry and client activity. Cash resales are likely to fluctuate quarter to quarter as they do not require the longer planning and lead times necessary for new data creation. The following table summarizes the components of Seitel's revenue and shows how cash resales (a non-GAAP financial measure) are a component of total revenue, the most directly comparable GAAP financial measure (in thousands):
|
Three Months Ended March 31, |
||||||||||||
| 2013 | 2012 | |||||||||||
| Total acquisition underwriting revenue | $ | 25,089 | $ | 36,572 | ||||||||
| Resale licensing revenue: | ||||||||||||
| Cash resales | 22,445 | 39,169 | ||||||||||
| Non-monetary exchanges | 324 | 709 | ||||||||||
| Revenue recognition adjustments | 2,072 | (5,173 | ) | |||||||||
| Total resale licensing revenue | 24,841 | 34,705 | ||||||||||
| Total seismic revenue | 49,930 | 71,277 | ||||||||||
| Solutions and other | 1,421 | 1,270 | ||||||||||
| Total revenue | $ | 51,351 | $ | 72,547 | ||||||||
Cash EBITDA represents cash generated from licensing data from our seismic library net of recurring cash operating expenses. We believe this measure is helpful in determining the level of cash from operations we have available for debt service and funding of capital expenditures (net of the portion funded or underwritten by our customers). Cash EBITDA includes cash resales plus all other cash revenues other than from data acquisitions, less cost of goods sold and cash selling, general and administrative expenses (excluding non-recurring corporate expenses such as severance and legal, financial and other expenses related to corporate and strategic transactions). The following is a quantitative reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, net income (in thousands):
|
Three Months Ended |
Last Twelve |
||||||||||||
| 2013 | 2012 | ||||||||||||
| Cash EBITDA | $ | 16,656 | $ | 32,673 | $ | 99,330 | |||||||
| Add (subtract) other revenue components not included in cash EBITDA: | |||||||||||||
| Acquisition underwriting revenue | 25,089 | 36,572 | 95,771 | ||||||||||
| Non-monetary exchanges | 324 | 709 | 1,169 | ||||||||||
| Revenue recognition adjustments | 2,072 | (5,173 | ) | (3,012 | ) | ||||||||
| Solutions non-cash revenue |
- |
20 |
- |
||||||||||
| Add (subtract) other items included in net income: | |||||||||||||
| Depreciation and amortization | (29,338 | ) | (39,384 | ) | (129,708 | ) | |||||||
| Non-cash operating expenses | (226 | ) | (145 | ) | (1,235 | ) | |||||||
| Non-recurring corporate expenses | 10 | (298 | ) | (920 | ) | ||||||||
| Interest expense, net | (9,315 | ) | (7,219 | ) | (31,107 | ) | |||||||
| Foreign currency gains (losses) | (647 | ) | 411 | (377 | ) | ||||||||
| Loss on early extinguishment of debt | (1,504 | ) |
- |
(1,504 | ) | ||||||||
| Other income | 1 | 81 | 300 | ||||||||||
| Provision for income taxes | (1,384 | ) | (3,541 | ) | (4,625 | ) | |||||||
| Net income | $ | 1,738 | $ | 14,706 | $ | 24,082 | |||||||
The following table summarizes the cash and non-cash components of our total operating expenses (cost of sales and selling, general and administrative (“SG&A”) expenses) for the three months ended March 31, 2013 and 2012 (in thousands):
|
Three Months Ended March 31, |
||||||||||||
| 2013 | 2012 | |||||||||||
| Cost of Sales | $ | 39 | $ | 97 | ||||||||
| Cash SG&A expenses | 7,161 | 7,947 | ||||||||||
| Cash operating expenses | 7,200 | 8,044 | ||||||||||
| Non-cash equity compensation expense | 226 | 73 | ||||||||||
| Non-cash rent expense |
- |
72 | ||||||||||
| Total | $ | 7,426 | $ | 8,189 | ||||||||
The following table summarizes our actual capital expenditures for the three months ended March 31, 2013 and our estimate for the year ending December 31, 2013 (in thousands):
|
Three Months |
Estimate for |
Total Estimate |
||||||||||||||||
| New data acquisition | $ | 41,809 | $ | 112,691 | $ | 154,500 | ||||||||||||
| Cash purchases and data processing | 1,851 | 3,749 | 5,600 | |||||||||||||||
| Non-monetary exchanges | 2,716 | 4,684 | 7,400 | |||||||||||||||
| Property and equipment and other | 364 | 1,536 | 1,900 | |||||||||||||||
| Total capital expenditures | 46,740 | 122,660 | 169,400 | |||||||||||||||
| Less: | ||||||||||||||||||
| Non-monetary exchanges | (2,716 | ) | (4,684 | ) | (7,400 | ) | ||||||||||||
| Cash underwriting | (25,032 | ) | (76,968 | ) | (102,000 | ) | ||||||||||||
| Net cash capital expenditures | $ | 18,992 | $ | 41,008 | $ | 60,000 | ||||||||||||
