TSX Symbol - PSD
Cusip No. 7458Q 10 9
CALGARY, May 4 /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, 2005.
Mr. MacDonald is also pleased to announce that Pulse has executed a
letter agreement to purchase a significant seismic database. This database
will add high-quality seismic data that is complementary to Pulse's existing
data library, and increase Pulse's 3D data library by 40%. The purchase will
be financed with a combination of cash and term debt from Pulse's existing
debt provider, and is expected to close on June 8, 2005. The letter agreement
is subject to a number of conditions, including a due diligence review and
execution of a formal Purchase and Sale Agreement.
Mr. MacDonald also announces that Pulse has declared its eighth
consecutive quarterly dividend of $0.0125 per common share. The dividend will
be paid on June 20, 2005 to shareholders of record at the close of business on
June 6, 2005. The Company's Dividend Reinvestment Plan for eligible
shareholders will be available for this dividend.
OVERVIEW
Data library sales increased by 44% to $5.8 million for the three months
ended March 31, 2005 compared to $4.0 million for the first quarter of 2004.
Free cash flow for the first quarter of 2005 was $0.3 million, compared
to negative free cash flow of $2.8 million reported in the first quarter of
2004. This significant increase in free cash flow in Q1 2005 compared to Q1
2004 is attributed to higher data library sales in Q1 2005 and higher cash
requirements for the participation surveys in Q1 2004.
Pulse had a working capital position of $1.7 million at March 31, 2005
compared to a slight deficiency at March 31, 2004.
In addition, Pulse repaid $4.0 million of long-term debt over the
twelve-month period ended March 31,2005.
Total revenue, net earnings and funds from operations for the first
quarter of 2005 were lower than the comparable period in 2004 as a result of
the unusually large volume of participation survey data delivered in the first
quarter of 2004.
Net earnings for the three months ended March 31, 2004 were $0.7 million
($0.02 per share diluted), compared to $3.0 million ($0.07 per share diluted)
for the same period in 2004. Funds from operations for the first quarter of
2005 was $6.4 million ($0.14 per share diluted), compared to $14.1 million
($0.34 per share diluted) generated for the same period in 2004. These per
share figures are based on the weighted average diluted shares outstanding of
46,560,735 for Q1 2005, compared to 41,168,557 for Q1 2004.
<<
Financial Highlights
($000s except per share data)
3 months ended Year ended
March 31, December 31,
-------------- -------------
2005 2004 2004
---- ---- ----
(unaudited) (audited)
Revenue:
Data library sales $ 5,793 $ 4,033 $ 25,611
Participation surveys $ 4,963 $ 12,375 $ 19,979
Other $ 1,778 $ 257 $ 5,678
Total revenue $ 12,534 $ 16,665 $ 51,268
Amortization of data libraries $ 6,134 $ 9,228 $ 22,862
Net earnings $ 724 $ 2,951 $ 7,719
Net earnings per share:
basic $ 0.02 $ 0.07 $ 0.18
diluted $ 0.02 $ 0.07 $ 0.18
Funds from operations (1) $ 6,350 $ 14,078 $ 36,776
Funds from operations per share (1):
basic $ 0.14 $ 0.35 $ 0.84
diluted $ 0.14 $ 0.34 $ 0.84
Free cash flow (1) $ 253 $ (2,814) $ 11,988
Working capital (deficiency) $ 1,672 $ (66) $ 3,845
Total assets $ 108,476 $ 94,303 $ 108,426
Capital expenditures:
Seismic library additions $ 6,097 $ 16,892 $ 26,083
Changes to work in progress $ (2) $ (8,372) $ (8,436)
Property & equipment additions $ 431 $ 29 $ 574
Total capital expenditures $ 6,526 $ 8,549 $ 18,221
Total long-term debt $ 15,425 $ 19,401 $ 16,865
Shareholders' equity $ 77,816 $ 65,785 $ 77,507
Weighted average shares outstanding:
basic 45,774,816 40,537,635 43,646,866
diluted 46,560,735 41,168,557 43,990,061
Shares outstanding at period end 45,774,816 40,715,767 45,774,816
(1) These non-GAAP financial measures are defined in the Financial
Summary below.
Operational Highlights
Seismic library:
2D in net kilometres 239,288 239,013 239,288
3D in net square kilometres 6,763 6,080 6,522
OPERATIONS SUMMARY
During the first quarter of 2005, Pulse Seismic commenced and completed
two 3D participation surveys in northern Alberta resulting in the addition of
241 square kilometres of 100%-owned 3D seismic data to the data library. Pulse
Seismic also undertook and completed two project management contracts during
the first quarter of 2005. Project management agreements involve Pulse Seismic
conducting exclusive seismic programs for clients who wish to retain
proprietary ownership of the acquired data.
During the first three months of 2005, Terrapoint undertook LiDAR
projects in the United States and in Canada. Weather delays in the northwest
United States combined with limited LiDAR survey demand in Western Canada kept
the LiDAR segment under budget in the first quarter; however, the current,
significant, confirmed backlog position of Terrapoint is expected to return
this segment to near-budgeted levels by the end of the second quarter of 2005.
Pulse's software development subsidiary, Trango Technologies Inc.
("Trango") remained on budget as increasing demand for Trango's products and
services, particularly from the United States oil and gas companies, continues
to show encouraging trends.
CORPORATE SUMMARY
On January 17, 2005 Mr. James Ferguson was appointed President of
Terrapoint Canada Inc. Mr. Ferguson was a founding member of Terrapoint and
has held the position of Vice President, Operations since 2000. Mr. Ferguson
holds a B.Sc. degree in survey science and statistics from the University of
Toronto and is a registered professional Ontario Land Surveyor.
Under Pulse's Dividend Reinvestment and Optional Share Purchase Plan,
eligible shareholders may automatically reinvest their dividends in common
shares of Pulse at 95% of the current market price. Eligible participants may
also purchase additional common shares of Pulse at the current market price,
with a minimum of $2,000 per purchase, and a maximum of $50,000 per calendar
year. In order to participate in the Plan, eligible shareholders must complete
and return the required Forms to the Plan Agent, Computershare Trust Company
of Canada, by two business days before the dividend record date.
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 in Canada
and therefore they may not be comparable to similar measures disclosed by
other companies. The Company has included these non-GAAP financial measures
because they are used by management, investors, analysts and others 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 and any
monetary data exchanges. The Company's definition of funds from operations is
cash flow from operations as prescribed by Canadian generally accepted
accounting principles, 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.
Revenue
For the three-month period ended March 31, 2005, Pulse recorded revenue
of $12.5 million compared to $16.7 million in the same period in 2004 as
detailed in the following table. Although the revenue level for the three
months ended March 31, 2005 reflects a 25% decrease from the comparable
three-month period in 2004, it includes a 44% increase in data library sales
quarter-over-quarter. The primary reason for the decrease in revenues was that
Pulse recorded $5.0 million of participation survey revenue in the first
quarter of 2005, compared to $12.4 million of participation survey revenue
recorded in the first quarter of 2004. The 2004 period had a higher than
normal delivery of participation survey data. Additionally, the revenue from
Trango for the first quarter increased 153% to $399,000 in 2005 from $158,000
in 2004. This major improvement relates to Trango's signing of several large
contracts with oil and gas companies in the United States. The revenue
classified as corporate and other in the table below relates to miscellaneous
revenue, foreign exchange gains and/or losses, and eliminated intercompany
sales. There was a decrease in corporate and other revenue
quarter-over-quarter, of 202%. For the first quarter of 2005, the Company
recorded revenue of $1.4 million for the LiDAR business segment, whereas the
first quarter of 2004 was nil, as Pulse did not acquire Terrapoint until
May 2004.
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Revenue Sources For the three months ended March 31
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2005 2004
-------------------------------------------------------------------------
Revenue % of Total Revenue % of Total
($000s) Revenue ($000s) Revenue
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Seismic revenue
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Data library sales $ 5,793 46 $ 4,033 24
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Participation surveys 4,963 40 12,375 74
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LiDAR revenue 1,480 12 - -
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Trango revenue 399 3 158 1
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Corporate and other (101) (1) 99 1
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Total $ 12,534 100 $ 16,665 100
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The data library acquired in the ReQuest Income Trust ("ReQuest")
acquisition included significant pre-paid data delivery obligations ("library
cards"). An outstanding obligation to deliver approximately $40.0 million of
seismic data from the ReQuest library, as of the acquisition date of
January 31, 2002, was reduced by 85% by the end of 2004 to approximately
$6.0 million, and was further reduced to a balance of $5.3 million at
March 31, 2005. Approximately half of the balance remaining as at
December 31, 2004 is expected to be drawn down during 2005. Going forward,
Pulse expects the outstanding library card balance to have minimal impact on
revenue generated by data library sales.
Data Library
Pulse invested $6.1 million to acquire new data in the first three months
of 2005, compared to $8.5 million in the first quarter of 2004. An additional
$8.4 million that was recorded at December 31, 2003 as work in progress,
relating to the participation survey programs completed in the first quarter
of 2004 was converted to data library additions in 2004 with the delivery of
the data in February and March 2004. The total capital expenditures for the
participation programs in 2005 related to two 3D participation surveys that
were conducted in northern Alberta. The Company acquired a total of 242 square
kilometres of 3D data, all of which is 100% owned by Pulse. The Company
expects that capital expenditures directed to participation surveys in 2005
will be comparable to the 2004 level.
Liquidity, Capital Resources and Capital Requirements
The working capital position of Pulse, including the current portion of
long-term debt of $5.9 million, at March 31, 2005 was $1.7 million, compared
to $3.8 million at December 31, 2004, and a deficiency of $66,000 at
March 31, 2004. The working capital position declined by 55% compared to the
December 31, 2004 position and improved by 248% compared to the March 31, 2004
position. Contributing to the reduction in working capital since
December 31, 2004 was the accrual of $1.6 million in current income taxes
payable and further funding of Terrapoint's operations. All working capital
covenants with Pulse's lenders have been met throughout each of these periods.
With the continuation of the very strong trend in existing data sales
levels, and Terrapoint entering its busy season with significant confirmed
backlog, Pulse management expects that its funds from operations will be
sufficient to finance operations, debt servicing, dividends and budgeted
capital expenditures for the remainder of 2005. The seismic data library is
continually growing through acquisition of new data, principally 3D data. The
ongoing growth in our seismic data library continues to position Pulse to be
able to provide valuable seismic data to industry participants into the
future. Historical data sales analysis shows that most seismic data retains
its value for many years, and with the technological advancements in
reprocessing that have been made in recent years, the Company's clients are
able to enhance the quality of older data in the library. With the acquisition
of Terrapoint, Pulse has now added airborne and ground-based LiDAR services to
its product offerings, and has begun accessing customers in new industries and
markets. Management is optimistic about the future success of Terrapoint and
expects it to enhance Pulse's financial results in 2005.
PULSE DATA INC.
Interim Consolidated Balance Sheets
(In Thousands of Dollars)
-------------------------------------------------------------------------
March 31, December 31,
2005 2004
-------------------------------------------------------------------------
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 5,008 $ 3,827
Accounts receivable 11,824 12,832
Prepaid expenses 217 234
Work in progress 1,027 693
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18,076 17,586
Data libraries 74,972 75,008
Participation surveys in progress - 2
Property and equipment 14,875 15,052
Investments 432 667
Deferred charges 121 121
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$ 108,476 $ 108,426
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,264 $ 4,466
Deferred revenue 2,680 3,613
Current portion of long-term debt 5,867 5,662
Income taxes payable 1,593 -
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16,404 13,741
Long-term debt 9,558 11,203
Future income taxes 4,698 5,975
Shareholders' equity:
Share capital 50,531 50,531
Contributed surplus 607 449
Retained earnings 26,678 26,527
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77,816 77,507
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$ 108,476 $ 108,426
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PULSE DATA INC.
Interim Consolidated Statement of Earnings and Retained Earnings
Three months ended March 31, 2005 and 2004
(In Thousands of Dollars, Except Per Share Data)
(Unaudited)
-------------------------------------------------------------------------
2005 2004
-------------------------------------------------------------------------
Revenue $ 12,534 $ 16,665
Operating expenses:
Amortization of data libraries 6,134 9,228
Operating 2,503 730
Depreciation and amortization 598 77
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9,235 10,035
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Gross margin 3,299 6,630
General and administrative expenses 1,647 837
Research and development expenses 239 -
Interest:
Long-term debt 227 292
Other (39) (26)
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188 266
-------------------------------------------------------------------------
Earnings before income taxes 1,225 5,527
Income taxes:
Current 1,778 784
Future (1,277) 1,792
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501 2,576
-------------------------------------------------------------------------
Net earnings $ 724 $ 2,951
Retained earnings, beginning of period 26,257 21,027
Dividends declared (573) (509)
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Retained earnings, end of period $ 26,678 $ 23,469
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Earnings per share:
Basic and diluted $ 0.02 $ 0.07
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PULSE DATA INC.
Interim Consolidated Statement of Cash Flows
Three months ended March 31, 2005 and 2004
(In Thousands of Dollars)
(Unaudited)
-------------------------------------------------------------------------
2005 2004
-------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings $ 724 $ 2,951
Items not involving cash:
Amortization of data libraries 6,134 9,228
Depreciation and amortization 598 77
Unrealized loss on foreign exchange 13 -
Future income taxes (1,277) 1,792
Stock-based compensation 158 22
Other - 8
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Funds from operations 6,350 14,078
Net change in non-cash working capital items
related to operations 4,701 (2,659)
Decrease in non-current deferred revenue - (41)
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11,051 11,378
Financing:
Repayment of long-term debt (1,440) (1,040)
Issue of share capital - 195
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(1,440) (845)
Investing:
Additions to data libraries through
participation surveys (6,097) (16,892)
Increase in participation surveys in progress 2 8,372
Dividends paid - (509)
Increase (decrease) in investments 235 (213)
Additions to property and equipment (431) (29)
Net change in non-cash working capital items
related to investing (2,139) (7,836)
-----------------------------------------------------------------------
(8,430) (17,107)
-------------------------------------------------------------------------
Increase (decrease) in cash 1,181 (6,574)
Cash and cash equivalents, beginning of period 3,827 9,018
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 5,008 $ 2,444
-------------------------------------------------------------------------
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During the period, the Corporation paid interest of $232,000
(2004 - $208,000) and received interest of $26,000 (2004 - $25,000).
During the period, the Corporation paid income taxes of $51,000
(2004 - $1,782,000).
OUTLOOK
The continuing robust global demand for petroleum products and strong
commodity price levels have enhanced the attractiveness of oil and gas
exploration by Canadian energy companies leading to a strong demand for
seismic data. Pulse continues to pursue the acquisition of other quality
seismic data sets, as we expect the addition of the seismic data referred to
earlier in the press release will have a significant impact on Pulse's data
sales going forward.
Trango was substantially on budget for the first quarter and is
well-positioned to execute its 2005 strategic plan.
Despite Terrapoint's slow start to the year both management and employees
have been involved in an ongoing process to improve all aspects of the
business. We have seen some very positive operational results so far in the
second quarter and with the implementation of these improvements and a
significant, solid backlog position, we expect this new segment to meet its
financial targets for 2005.
Overall, Pulse expects another strong year in fiscal 2005.
CORPORATE PROFILE
Pulse is a Calgary-based international company specializing in data
ownership through acquisition, marketing and information management, with
current focus on the energy sector. Through its three operating segments,
Pulse Seismic, Terrapoint and Trango, the Company has evolved into an industry
leader in providing better information faster.
Pulse Seismic is at the forefront with regard to acquiring, marketing and
licensing seismic data in Western Canada. Pulse Seismic's library currently
consists of approximately 240,000 net kilometres of 2D data and more than
6,700 net square kilometres of 3D data. Revenue is generated through licensing
of the data library and through the licensing of participation surveys.
With offices in Calgary, Ottawa and Houston, Terrapoint is the largest
and most experienced LiDAR (Light Detection And Ranging) data provider in the
world. LiDAR data is used to produce survey-quality 3D digital elevation
models. The use of digital elevation data significantly reduces the cost of
project planning and design in a broad array of industries including urban,
transportation and industrial and resource planning and development. Since its
inception in 1998, Terrapoint has worked in many countries around the world
providing cost-effective solutions to its clients' needs.
Trango has developed an exceptional reputation for providing GIS data
management products and services to the North American oil and gas industry.
Trango provides the technology that allows clients to better exploit their
seismic, well, geologic and related data.
Pulse operates prudently using a disciplined approach that capitalizes on
its strong financial base, which in turn has provided a solid foundation for
growth. By incorporating synergistic products and services into the company
mix, Pulse has positioned itself for continued expansion and diversification
in market areas that require better information faster.
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 Annual Report for 2004
and 2005 Interim Reports 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 expectations change.
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