ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Companys financial
statements and notes thereto included elsewhere in this Form 10-Q.
Forward Looking Statements
Statements other than statements of historical fact included in this Form 10-Q that relate to forecasts, estimates or
other expectations regarding future events, including without limitation, statements under Managements Discussion and Analysis of Financial Condition and Results of Operations regarding technological advancements and our financial
position, business strategy and plans and objectives of our management for future operations, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. When used in this Form 10-Q, words such as anticipate, believe, estimate, expect, intend, and similar expressions, as they relate to us or our management, identify
forward-looking statements. Such forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated
by the forward-looking statements as a result of certain factors, including but not limited to the volatility of oil and natural gas prices, dependence upon energy industry spending, disruptions in the global economy, industry competition, delays,
reductions or cancellations of service contracts, high fixed costs of operations, external factors affecting our crews such as weather interruptions and inability to obtain land access rights of way, reduced utilization, whether we enter into
turnkey or term contracts, crew productivity, limited number of customers, credit risk related to our customers, the availability of capital resources and operational disruptions. A discussion of these factors, including risks and uncertainties, is
set forth under Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2012 and in our other reports filed from time to time with the Securities and Exchange Commission. These forward-looking statements
reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategies and liquidity. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. We assume no obligation to update any such forward-looking statements.
Overview
We are a leading provider of onshore seismic data acquisition services in the lower 48 states of the
United States. During 2012, we entered the Canadian market by forming a new Canadian subsidiary. Substantially all of our revenues are derived from the seismic data acquisition services we provide to our clients, mainly domestic oil and natural
gas companies. Demand for our services depends upon the level of spending by these companies for exploration, production, development and field management activities, which depends, in part, on oil and natural gas prices. Significant fluctuations in
domestic oil and natural gas exploration activities and commodity prices have affected the demand for our services and our results of operations in years past, and such fluctuations continue to be the single most important factor affecting our
business and results of operations.
After a severe contraction in demand for our services beginning at the end of 2008 and
continuing into 2010 due to the global economic slowdown, we began to experience an increase in demand for our services, particularly in the oil and liquids-rich basins. Demand for our services continued to strengthen through fiscal 2011 and 2012.
In response to this demand increase, we redeployed three seismic data acquisition crews in fiscal 2010 and two seismic data acquisition crews in fiscal 2011, bringing our crew count to fourteen crews. We have maintained a balanced order book in
terms of client mix and geographical diversity with the majority of the projects in oil and liquids-rich basins. Although our clients may cancel, delay or alter their service contracts on short notice and we continue to remain subject to land access
permit and weather delays, our current order book reflects commitment levels sufficient to maintain operation of fourteen crews into fall of 2013. The majority of our crews are currently working in oil producing basins. However, in recent years we
have experienced periods in which the services we provided were primarily to clients seeking natural gas.
While our revenues
are mainly affected by the level of client demand for our services, our revenues are also affected by the pricing for our services that we negotiate with our clients and the productivity and utilization level of our data acquisition crews. Factors
impacting productivity and utilization levels include crew downtime related to inclement weather, delays in acquiring land access permits, agricultural or hunting activity, holiday schedules, short winter days, crew repositioning or equipment
failure, whether we enter into turnkey or term contracts with our clients, the number and size of crews and the number of recording channels per crew. Consequently, our efforts to negotiate more favorable contract terms in our supplemental service
agreements, to mitigate access permit delays and to improve overall crew productivity may contribute to growth in our revenues. As demand for our services continues to be robust, we were able to negotiate more favorable contract terms during the
second half of fiscal 2012 and during the first six months of fiscal 2013.
Currently, most of our client contracts are
turnkey contracts. The percentage of revenues derived from turnkey contracts has grown in the past few years from approximately half of our revenues in fiscal 2008 to in excess of three-quarters of our revenues in fiscal 2013. While turnkey
contracts allow us to capitalize on improved crew productivity, we also bear more risks related to weather
11
and crew downtime. We expect the percentage of turnkey contracts to remain high as we continue to expand our operations in the mid-continent, western and southwestern regions of the United States
in which turnkey contracts are more common. However, during fiscal 2013 we have observed an increase in inquiries and requests for term contracts.
Over time, we have experienced continued increases in recording channel capacity on a per crew or project basis. This increase in channel count demand is driven by client needs and is necessary in order
to produce higher resolution images, increase crew efficiencies and undertake larger scale projects. Due to the increase in demand for higher channel counts, we have continued our investments in additional channels. In response to project-based
channel requirements, we routinely deploy a variable number of channels on a variable number of crews in an effort to maximize asset utilization and meet client needs. We believe we will realize the benefit of increased channel counts and
flexibility of deployment through increased crew efficiencies, higher revenues and margins.
Reimbursable third-party charges
related to our use of helicopter support services, specialized survey technologies and dynamite energy sources in areas with limited access are another important factor affecting our results. During fiscal 2011, the level of these third-party
charges as a percentage of revenue was especially high, approaching 50% of revenue, mainly as a result of our continued operations in areas with limited access in the eastern United States. However, revenues associated with third-party charges
declined as a percentage of revenue during fiscal 2012 and the first six months of fiscal 2013 as a result of such third-party charges falling at or below our historical average. We expect that as we continue to expand our operations in the more
open terrain of the mid-continent, western and southwestern regions of the United States, the level of these third-party charges will continue to be generally within or below our historical range of 25% to 35% of revenue.
During fiscal 2012 and to-date in fiscal 2013, we purchased or leased a significant number of cable-less recording channels. We have
utilized this equipment as primarily stand-alone recording systems but on occasion in conjunction with our cable-based systems. As a result of the introduction of cable-less recording systems, we have realized increased crew efficiencies and
increased revenue on projects using this equipment. We believe we will experience continued demand for cable-less recording systems in the future. As we have replaced cable-based recording equipment with cable-less equipment on certain crews, the
cable-based recording equipment continues to be redeployed on existing crews.
We anticipate reducing the number of large
channel count crews to thirteen during the third or fourth fiscal quarter of 2013 by taking an I/O RSR radio-based crew out of service. We believe we will be able to improve long-term utilization rates and meet client demands with thirteen large
channel count crews. Activity levels for our small channel count Wireless Seismic RT 2000 crew is expected to increase, keeping our overall crew count at fourteen crews. It is our intention to operate six Geospace GSR cable-less equipped crews, six
ARAM cable-based equipped crews, one I/O RSR radio-based equipped crew and one 2,500 channel Wireless Seismic RT 2000 crew. We will maintain the ability to redeploy an additional large channel count crew in short order should client demand dictate.
During the third and fourth fiscal quarters of 2013, we will be utilizing a FairfieldNodal cable-less system under a lease arrangement in place of an ARAM system on one of our crews working under contract in the Permian Basin.
Our utilization rates are expected to be impacted on several crews in the third fiscal quarter of 2013 due to project readiness
and early project completion, but the overall effect on our results is anticipated to be partially offset with the completion of several projects contracted with incentive clauses during the third fiscal quarter. In addition, the reduction of the
large channel count crew discussed above could have a short-term effect on utilization rates during the third or fourth fiscal quarter as our crews are reassigned as scheduling allows.
During 2012, we entered into the Canadian market. This market is highly seasonal and operates primarily from late November through March,
depending upon weather conditions. While the 2012-2013 winter season was not as robust as anticipated, we completed our first multi-component 3D survey in Canada, secured necessary industry safety audits and believe we performed at a high level of
efficiency as a new entrant into the Canadian market. We anticipate operating one or two crews in Canada in the winter season 2013-2014. Our financial results for our Canadian operations had a slight negative effect on our overall second quarter and
six month fiscal 2013 results.
While the markets for oil and natural gas have been very volatile and are likely to continue
to be so in the future, and we can make no assurances as to future levels of domestic exploration or commodity prices, we believe opportunities exist for us to enhance our market position by responding to our clients continuing desire for
higher resolution subsurface images. If economic conditions were to weaken, our customers reduce their capital expenditures or there is a significant sustained drop in oil and natural gas prices, it would result in diminished demand for our seismic
services, could cause downward pressure on the prices we charge and would affect our results of operations.
12
Second Quarter and First Six Months of Fiscal 2013 Highlights
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EBITDA for the quarter ended March 31, 2013 increased to $20,314,000 compared to $17,520,000 for the same period of fiscal 2012, an increase of 16
percent; EBITDA for the six months ended March 31, 2013 was $34,652,000 compared to $28,548,000 for the same period of fiscal 2012, an increase of 21 percent;
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Income from operations for the quarter ended March 31, 2013 increased to $10,598,000 compared to $9,446,000 for the quarter ended March 31,
2012, an increase of 12 percent; income from operations for the six months ended March 31, 2013 was $15,792,000 compared to $12,672,000 for the same period of fiscal 2012, an increase of 25 percent;
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Net income for the quarter ended March 31, 2013 increased to $6,279,000, or $0.78 per share attributable to common stock, compared to $5,589,000,
or $0.71 per share attributable to common stock, for the quarter ended March 31, 2012;
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Net income for the six months ended March 31, 2013 was $9,207,000, or $1.15 per share attributable to common stock, versus $8,820,000, or $1.11
per share attributable to common stock, for the same period of fiscal 2012, which included the effect of an $0.18 per share one-time tax benefit recognized in the December 31, 2011 quarter related to a merger agreement terminated in calendar
2011; excluding the impact of the one-time tax benefit in fiscal 2012, net income and earnings per share both increased 24 percent in the fiscal 2013 six month period;
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Ended with approximately $67 million of working capital at March 31, 2013;
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Balanced portfolio of projects in the Eagle Ford Shale, Bakken Shale, Marcellus Shale, Mississippi Lime of Kansas and Oklahoma, the state of
Mississippi and the Permian Basin including the Cline Shale, Avalon Shale, Bone Spring and Wolfcamp areas;
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Replaced an I/O RSR recording system with 12,000 channel Geospace GSR cable-less recording system in the first fiscal quarter of 2013; and
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Secured contracts to perform surface microseismic surveys in West Texas and East Texas and completed one in April.
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Results of Operations
Operating Revenues
. Our operating revenues decreased 3% during the second quarter of fiscal 2013 to $83,350,000 from $85,546,000 in
the same quarter of fiscal 2012 and decreased 10% during the first six months of fiscal 2013 to $159,979,000 from $177,928,000 in the same period of fiscal 2012. Third-party charges decreased significantly during the second quarter and first six
months of fiscal 2013 while fee revenue net of third-party charges increased 14% and 12%, respectively, from the same periods in fiscal 2012. Third-party charges decreased between these periods due to the movement of our operations towards the more
open terrain of the western United States where the need for drilling and helicopter services is reduced. Third-party reimbursable charges were also reduced as a result of our shift away from using third-party providers to using in-house services
for permit, survey and line clearing. Revenues net of third-party charges during these periods were also positively impacted by increased utilization, production and more favorable contract terms between periods.
Operating Costs
. Operating expenses for the second quarter and first six months of fiscal 2013 decreased 8% and 18%, respectively,
to $59,666,000 compared to $65,202,000 in the second quarter comparative period and to $118,401,000 compared to $144,016,000 in the first six months comparative period. The decreases for the second fiscal quarter and first six months of fiscal 2013
compared to the corresponding periods of 2012 were primarily due to the reduction of reimbursed expenses during these periods. Operating expenses excluding third-party charges increased for the second quarter and first six months of fiscal 2013
compared to the corresponding periods of 2012. These increases resulted primarily from completing our first Canadian project during the period and from increased field personnel and fuel costs associated with higher utilization in fiscal 2013. As
discussed above, reimbursed expenses have a similar impact on operating costs.
General and administrative expenses were 4.2%
and 4.4% of revenues in the second quarter and first six months of fiscal 2013, respectively, compared to 3.4% and 3.1% of revenues in the same periods of fiscal 2012. General and administrative expenses increased to $3,508,000 during the second
quarter of fiscal 2013 from $2,920,000 during the same period of fiscal 2012 and increased to $7,104,000 during the first six months of fiscal 2013 from $5,476,000 during the first six months of fiscal 2012. The increase in expenses during these
periods was primarily associated with the costs to support our Canadian operations. In addition, we incurred increased administrative costs primarily related to employee costs to support our increased operating activity.
Depreciation for the second fiscal quarter of 2013 and six months ended March 31, 2013 totaled $9,578,000 and $18,682,000,
respectively, compared to $7,978,000 and $15,764,000 for the second fiscal quarter and first six months of fiscal 2012, respectively. The increase in depreciation expense is the result of capital expenditures we made during fiscal 2012 and to-date
in fiscal 2013. Our depreciation expense is expected to continue to increase during fiscal 2013, reflecting our higher capital expenditures during fiscal 2012 and in the six months just ended.
Our total operating costs for the second quarter and first six months of fiscal 2013 were $72,752,000 and $144,187,000, respectively, a
decrease of 4% and 13% from the same periods in fiscal 2012. These decreases in the second quarter and first six months of fiscal 2013 were primarily due to the factors described above.
13
Taxes
. Income tax expense was $6,433,000 for the six months ended March 31, 2013
compared to income tax expense of $3,687,000 for the six months ended March 31, 2012. Income tax expense was $4,302,000 for the three months ended March 31, 2013 compared to income tax expense of $3,823,000 for the three months ended
March 31, 2012. The effective tax rates for the six months ended March 31, 2013 and 2012 were approximately 41.1% and 29.5%, respectively. Our effective tax rates differ from the statutory federal rate of 35% for certain items such as
foreign operations, state and local taxes, non-deductible expenses, discrete items, expenses related to share-based compensation that were not expected to result in a tax deduction and changes in reserves for uncertain tax positions.
Use of EBITDA (Non-GAAP measure)
We define EBITDA as net income plus interest expense, interest income, income taxes, depreciation and amortization expense. Our management uses EBITDA as a supplemental financial measure to assess:
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the financial performance of our assets without regard to financing methods, capital structures, taxes or historical cost basis;
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our liquidity and operating performance over time in relation to other companies that own similar assets and that we believe calculate EBITDA in a
similar manner; and
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the ability of our assets to generate cash sufficient for us to pay potential interest costs.
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We also understand that such data are used by investors to assess our performance. However, the term EBITDA is not defined under
generally accepted accounting principles (GAAP), and EBITDA is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP. When assessing our operating performance or liquidity, investors and
others should not consider this data in isolation or as a substitute for net income, cash flow from operating activities or other cash flow data calculated in accordance with GAAP. In addition, our EBITDA may not be comparable to EBITDA or similarly
titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as us. Further, the results presented by EBITDA cannot be achieved without incurring the costs that the measure excludes: interest,
taxes, depreciation and amortization.
The reconciliation of our EBITDA to our net income and net cash provided by operating
activities, which are the most directly comparable GAAP financial measures, are provided in the tables below:
Reconciliation of EBITDA to
Net Income
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Three Months Ended March 31,
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Six Months Ended March 31,
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2013
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2012
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2013
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2012
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(in 000s)
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(in 000s)
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Net income
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$
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6,279
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$
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5,589
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$
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9,207
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$
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8,820
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Depreciation
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9,578
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7,978
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18,682
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15,764
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Interest expense (income), net
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155
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130
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330
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277
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Income tax expense
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4,302
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3,823
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6,433
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3,687
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EBITDA
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$
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20,314
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$
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17,520
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$
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34,652
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$
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28,548
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Reconciliation of EBITDA to Net Cash Provided by Operating Activities
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Three Months Ended March 31,
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Six Months Ended March 31,
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2013
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2012
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2013
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2012
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(in 000s)
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(in 000s)
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Net cash provided by operating activities
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$
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3,399
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$
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22,404
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$
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12,413
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$
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20,906
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Changes in working capital and other items
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17,332
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(4,418
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)
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23,296
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8,669
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Noncash adjustments to income
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(417
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)
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(466
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)
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(1,057
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)
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(1,027
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)
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EBITDA
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$
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20,314
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$
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17,520
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$
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34,652
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$
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28,548
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14
Liquidity and Capital Resources
Introduction.
Our principal sources of cash are amounts earned from the seismic data acquisition services we provide to our
clients. Our principal uses of cash are the amounts used to provide these services, including expenses related to our operations and acquiring new equipment. Accordingly, our cash position depends (as do our revenues) on the level of demand for our
services. Historically, cash generated from our operations along with cash reserves and borrowings from commercial banks have been sufficient to fund our working capital requirements and, to some extent, our capital expenditures.
Cash Flows.
Net cash provided by operating activities was $12,413,000 for the six months ended March 31, 2013 and $20,906,000
in the six months ended March 31, 2012. Net cash provided by operating activities for the first six months of fiscal 2013 was positively impacted by increased margins and revenue since September 30, 2012. Despite the fact that we have had
an increase in our outstanding receivables, our collection experience as an average number of days in accounts receivable has remained at approximately sixty during the last twelve months. We believe that our allowance for doubtful accounts of
$250,000 at March 31, 2013 is adequate to cover exposures related to our trade account balances.
Net cash used by
investing activities was $48,686,000 in the six months ended March 31, 2013 and $19,469,000 in the six months ended March 31, 2012. The net cash used in investing activities in fiscal 2013 primarily represents capital expenditures of
$40,147,000, net of non-cash capital expenditures and non-cash capital lease obligations, made from excess cash reserves. Short-term investments of $11,750,000 in certificates of deposit were also made from excess cash reserves. In addition, we
reinvested the proceeds from the maturity of short-term investments of $3,000,000 into additional certificates of deposit. In fiscal 2012, excess cash reserves were used to fund capital expenditures of $19,688,000.
Net cash used by financing activities in the six months ended March 31, 2013 includes $983,000 in proceeds from our Third Term Note
that was used to purchase equipment for our Canadian operations and principal payments for all three term notes of $4,343,000. In the six months ended March 31, 2012, financing activities included $2,620,000 in principal payments on our Term
Note.
Capital Expenditures.
Our Board of Directors has approved a fiscal 2013 capital budget of $50,000,000. To date,
$43,716,000 of the capital budget has been spent for the purchase of 12,000 GSX single-channel recording units, 900 GSR 4-channel recording units, 5,500 ARAM Aries channels, 2,500 channels of the Wireless Seismic RT 2000 system, additional
conventional geophones, vehicles to improve our fleet and ten INOVA vibrator energy source units. The remaining balance of the capital budget will be used for maintenance capital purposes. We believe these expenditures will allow us to maintain our
competitive position as we respond to client desire for higher resolution subsurface images. We anticipate that capital expenditures for fiscal 2014 will be at reduced levels from recent fiscal years and will include additional equipment
expenditures for our Canadian operation.
We continually strive to supply our clients with technologically advanced 3-D
seismic data acquisition recording systems and data processing capabilities. We maintain equipment in and out of service in anticipation of increased future demand for our services.
Capital Resources.
Historically, we have primarily relied on cash generated from operations, cash reserves and borrowings from
commercial banks to fund our working capital requirements and, to some extent, our capital expenditures. Recently, we have funded some of our capital expenditures through equipment term loans and capital leases. We have also funded our capital
expenditures and other financing needs from time to time through public equity offerings.
Our revolving line of credit loan
agreement is with Western National Bank. The agreement was renewed June 2, 2011 under the same terms as the previous agreement and permits us to borrow, repay and reborrow, from time to time until June 2, 2013, up to $20.0 million based on
the borrowing base calculation as defined in the agreement. Our obligations under this agreement are secured by a security interest in our accounts receivable, equipment and related collateral. Interest on the facility accrues at an annual rate
equal to either the 30-day LIBOR, plus two and one-quarter percent, or the Prime Rate, minus three-quarters percent, as we direct monthly, subject to an interest rate floor of 4%. Interest on the outstanding amount under the loan agreement is
payable monthly. The loan agreement contains customary covenants for credit facilities of this type, including limitations on disposition of assets, mergers and reorganizations. We are also obligated to meet certain financial covenants under the
loan agreement, including maintaining specified ratios with respect to cash flow coverage, current assets and liabilities and debt to tangible net worth. We were in compliance with all covenants including specified ratios as of March 31, 2013
and April 30, 2013 (the date on which the last compliance calculation was made) and have the full line of credit available for borrowing. We have not utilized the revolving line of credit during the current fiscal year or the fiscal year ended
September 30, 2012.
We amended our credit loan agreement with Western National Bank on June 30, 2011 to add a Term
Note provision, which provided $16,427,000 in financing for the purchase of Geospace Technologies GSR equipment. The Term Note is repayable over a period of 36 months at $485,444 per month plus any applicable interest in excess of 4%. The Term Note
bears interest at an annual rate equal to either the 30-day LIBOR, plus two and one-quarter percent, or the Prime Rate, minus three-quarters percent, as we direct monthly, subject to an interest rate floor of 4%, and otherwise has the same terms as
our revolving line of credit. The Term Note is collateralized by a security interest in our accounts receivable, equipment and related collateral and matures with all outstanding balances due on June 30, 2014.
15
On May 11, 2012, we entered into a Second Term Note under our credit loan agreement
with Western National Bank. The Second Term Note allows us to borrow from time to time up to $15.0 million to purchase equipment. On July 5, 2012, we borrowed $9,346,000 under the Second Term Note to purchase Geospace Technologies GSR recording
equipment. The outstanding principal under the Second Term Note is amortized over 36 months. The Second Term Note bears interest at an annual rate equal to either the 30-day LIBOR, plus two and one-quarter percent, or the Prime Rate, minus
three-quarters percent, as we direct monthly, subject to an interest rate floor of 3.75%, and otherwise has the same terms as our revolving line of credit. The Second Term Note is collateralized by a security interest in our accounts receivable,
equipment and related collateral and matures with all outstanding balances due on May 2, 2015.
On February 12,
2013, our subsidiary DSS entered into a Third Term Note with Wells Fargo Equipment Finance Company. DSS obtained $983,000 in financing for the purchase of equipment. The Third Term Note is repayable over a period of 36 months at $28,980 per month
and bears interest at an implied annual fixed rate of 3.84%. The Third Term Note is collateralized by a security interest in the DSS equipment and matures with all outstanding balances due on February 5, 2016.
In the second quarter of fiscal 2012, we began leasing vehicles from Enterprise Fleet Management under capital leases. These capital
lease obligations are payable in 36 to 60 monthly installments and mature between December 2014 and November 2017. At March 31, 2013, we had leased 83 vehicles under these capital leases.
The following table summarizes payments due in specific periods related to our contractual obligations with initial terms exceeding one
year as of March 31, 2013.
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Payments Due by Period (in 000s)
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Contractual Obligations
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Total
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Within
1 Year
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1-2
Years
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3-5
Years
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After 5
Years
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Operating lease obligations (office space)
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$
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3,152
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$
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860
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$
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1,704
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$
|
588
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$
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Capital lease obligations
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$
|
2,175
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|
|
$
|
822
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|
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$
|
1,240
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|
|
$
|
113
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|
$
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Debt obligations
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$
|
15,743
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|
|
$
|
9,204
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|
|
$
|
6,539
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|
|
$
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|
|
$
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Total
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|
$
|
21,070
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|
|
$
|
10,886
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|
|
$
|
9,483
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|
|
$
|
701
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|
|
$
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In April 2012, we filed a shelf registration statement with the SEC covering the periodic offer and sale
of up to $150.0 million in debt securities, preferred and common stock and warrants. The registration statement allows us to sell securities in one or more separate offerings with the size, price and terms to be determined at the time of sale. The
terms of any securities offered would be described in a related prospectus to be filed separately with the SEC at the time of the offering. The filing of the shelf registration statement will enable us to act quickly if and when opportunities arise.
We believe that our capital resources and cash flow from operations are adequate to meet our current operational needs. We
believe we will be able to finance our capital requirements through cash flow from operations, cash on hand, through borrowings under our revolving line of credit, additional equipment term loans and capital leases. However, our ability to satisfy
our working capital requirements and fund future capital requirements will depend principally upon our future operating performance, which is subject to the risks inherent in our business, including the demand for our seismic services from clients.
Off-Balance Sheet Arrangements
As of March 31, 2013, we had no off-balance sheet arrangements.
Critical Accounting
Policies
Information regarding our critical accounting policies and estimates is included in Item 7,
Managements Discussion and Analysis of Financial Condition and Results of Operations included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2012.
Recently Issued Accounting Pronouncements
In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, that updated guidance
related to disclosure of reclassification amounts out of accumulated other comprehensive income. The standard requires that companies present, either in a single note or parenthetically on the face of the financial statements, the effect of
significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. ASU 2013-02 was effective for us as of January 1, 2013. The
adoption of this guidance did not have a material impact on our financial statements.
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