TSX Symbol - PSD
CALGARY, March 14 /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 year ended December 31, 2005.
Mr. MacDonald is also pleased to announce that Pulse has declared its
eleventh consecutive quarterly dividend. This dividend is $0.0375 per common
share and will be paid on April 14, 2006 to shareholders of record at the
close of business on March 31, 2006. This dividend represents a 50% increase
in the annual dividend rate to $0.15 per common share, as previously announced
in its news release on February 14, 2006. The Company's Dividend Reinvestment
Plan for eligible shareholders will be available for this dividend.
A conference call to review the 2005 year end results has been scheduled
for 1:00 pm ET (11:00 am MT) on Wednesday March 15, 2006. The conference call
dial in number is (416) 644-3418 (Toronto) and 1-800-814-4941. A live webcast
will be accessible at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)1390400.
HIGHLIGHTS
- Free cash flow(1) for the year ended December 31, 2005 was
$23.5 million, compared to $12.0 million in 2004.
- Based on the Company's current share price, the dividend noted
above represents an approximate yield of 5.3%.
- Seismic data library sales increased by 36% to a record level of
$34.9 million for the year ended December 31, 2005 compared to
$25.7 million for the year ended December 31, 2004.
- Pulse had a working capital position of $17.0 million at
December 31, 2005 compared to a working capital position of
$3.8 million at December 31, 2004.
- Pulse repaid $5.5 million of long-term debt during 2005, and
restructured its long-term debt facility with its principal
lenders to include an additional $15.4 million which was used to
purchase a significant data set in June 2005.
- Pulse added 2,914 net square kilometres of 3D seismic to its data
library during 2005 through the purchase of a significant seismic
data set in June 2005 (approximately 2,500 net square kilometres
of 3D data) and through four participation surveys (418 net square
kilometres of 3D data), compared to the addition of 1,100 net
square kilometres of 3D data through seven participation surveys
in 2004.
- LiDAR segment revenue for 2005 was $8.5 million, a 118% increase
over $3.9 million recorded for the period May 26, 2004 to
December 31, 2004. However, the LiDAR business segment loss before
income taxes increased to $3.4 million in 2005.
<<
Financial Highlights
($000s except per share data)
3 months ended Year ended
December 31 December 31
---------------------- ----------------------
2005 2004 2005 2004
---- ---- ---- ----
(unaudited) (audited)
Revenue
Data library sales $ 12,439 $ 4,721 $ 34,905 $ 25,674
Participation surveys $ 4,368 $ (116) $ 10,006 $ 19,916
LiDAR $ 1,963 $ 1,321 $ 8,452 $ 3,886
Trango & other $ 336 $ 213 $ 1,229 $ 1,516
Total revenue $ 19,106 $ 6,139 $ 54,592 $ 50,992
Amortization of data
libraries $ 6,779 $ 6,423 $ 21,536 $ 22,862
Net earnings $ 4,020 $ 5,305 $ 6,488 $ 7,719
Net earnings per share:
basic and diluted $ 0.09 $ 0.12 $ 0.14 $ 0.18
Funds from operations(1) $ 13,860 $ 2,094 $ 35,017 $ 36,776
Funds from operations
per share(1):
basic $ 0.30 $ 0.33 $ 0.76 $ 0.84
diluted $ 0.30 $ 0.33 $ 0.75 $ 0.84
Free cash flow(1) $ 7,781 $ 7,048 $ 23,458 $ 11,988
Working capital $ 16,996 $ 3,845 $ 16,996 $ 3,845
Total assets $ 129,569 $ 108,426 $ 129,569 $ 108,426
Capital expenditures:
Seismic data purchases $ - $ 1,295 $ 15,225 $ 1,295
Participation surveys $ 6,079 $ 8,149 $ 11,559 $ 24,788
Changes to work in
progress $ 181 $ (4,183) $ 190 $ (8,436)
Property & equipment
additions $ 139 $ 225 $ 1,510 $ 574
Total capital
expenditures $ 6,399 $ 5,486 $ 28,484 $ 18,221
Long-term debt (net of
current maturities) $ 20,772 $ 11,203 $ 20,772 $ 11,203
Shareholders' equity $ 82,432 $ 77,507 $ 82,432 $ 77,507
Weighted average shares
outstanding:
basic 46,500,615 45,654,671 46,161,608 43,646,866
diluted 46,320,276 46,002,105 46,842,744 43,990,061
Shares outstanding at
period end 46,559,778 45,774,816 46,559,778 45,774,816
(1) These non-GAAP financial measures are defined in the Financial
Summary below.
Operational Highlights
Seismic library:
2D in net kilometres 239,822 239,288 239,822 239,288
3D in net square
kilometres 9,442 6,522 9,442 6,522
FINANCIAL SUMMARY
The Company's continuous disclosure documents may provide discussion and
analysis of "free cash flow", "funds from operations" and "funds from
operations per share". These financial measures do not have a standard
definition 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. The
Company's definition for funds from operations is defined as 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 cash flow from operations divided by the
weighted average number of shares outstanding for the period.
Overview
Net earnings for the year ended December 31, 2005 were $6.5 million
($0.14 per share diluted), compared to $7.7 million ($0.18 per share diluted)
for 2004. Funds from operations for 2005 were $35.0 million ($0.75 per share
diluted), compared to $36.8 million ($0.84 per share diluted) generated for
the year ended December 31, 2004. These per share figures are based on the
weighted average diluted shares outstanding of 46,842,744 for 2005, compared
to 43,990,061 for 2004.
On June 15, 2005 Pulse successfully completed the acquisition of a
significant seismic data base which has increased the Company's 3D data
library by 40%. The acquisition consists of approximately 2,500 net square
kilometres of 3D seismic data and 500 net kilometres of 2D seismic data and is
located in the south-central area of Alberta. This valuable addition is
complementary to Pulse's existing database and is located in an area that has
recently seen a significant increase in exploration activity by oil and gas
companies. The purchase price of $15.2 million was principally financed by
term debt through Pulse's existing debt provider. The effective date of the
transaction was May 2, 2005.
Revenue
For the year ended December 31 (stated in thousands of dollars)
(In 2004, the LiDAR segment includes results from May 26 to December 31.)
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2005 2004
-----------------------------------------
Business Segment % of Total % of Total %
Revenue Revenue Revenue Revenue Change
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Seismic Data:
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Data library sales $ 34,905 63.9 $ 25,674 50.3 36.0
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Participation surveys 10,006 18.3 19,916 39.1 (49.8)
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LiDAR 8,452 15.5 3,886 7.6 117.5
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Trango 1,455 2.7 1,437 2.8 1.3
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Corporate and other (226) (0.4) 79 0.2 (386.0)
-----------------------------------------------------
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Total $ 54,592 100 $ 50,992 100 7.1
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For the three months ended December 31 (stated in thousands of dollars)
-------------------------------------------------------------------------
2005 2004
-----------------------------------------
Business Segment % of Total % of Total %
Revenue Revenue Revenue Revenue Change
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Seismic Data:
-------------------------------------------------------------------------
Data library sales $ 12,439 65.1 $ 8,520 44.6 46.0
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Participation surveys 4,368 22.8 7,657 40.2 (43.0)
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LiDAR 1,963 10.2 2,059 10.8 (4.7)
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Trango 390 2.0 820 4.3 (52.4)
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Corporate and other (54) (0.1) 54 0.1 (200.0)
-----------------------------------------------------
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Total $ 19,106 100 $ 19,110 100 (0.02)
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Seismic Data Segment
The seismic data segment, which includes data library sales and
participation survey revenues, contributed 82.2% of total revenue for the
Company in 2005, and 87.9% of total revenue for the fourth quarter of 2005. In
2004, with the Terrapoint acquisition effective May 26, 2004, the seismic data
segment contributed 89.4% of total revenue for the year ended December 31,
2004 and 84.8% of total revenue for the fourth quarter of 2004. For the year
ended December 31, 2005, Pulse recorded total seismic revenue of $44.9 million
compared to $45.6 million for 2004.
Within the seismic data segment the Company generates two types of
revenue: data library sales and participation survey revenue. While
participation survey revenue increases revenue and earnings significantly in
periods of high survey activity, participation surveys represent an investment
in the seismic data library that initially draws down the capital resources of
the Company. Data library sales generate immediate free cash flow through
licenses of seismic data from the existing library of seismic data, which can
occur many times without incurring further costs.
Seismic data segment revenue for the year ended December 31, 2005
reflects an overall decrease of 1.5% from 2004, but includes a 36.0% increase
in data library sales year-over-year, and a 46% increase in data library sales
for the fourth quarter of 2005 compared to the same period in 2004. The
primary reason for the small decrease in total seismic data segment revenue
was that Pulse recorded $10.0 million of participation survey revenue in 2005,
compared to $19.9 million of participation survey revenue in 2004. Even though
participation surveys were reduced in 2005 the Company added substantially
more 3D seismic data to the library in 2005 through the $15.2 million purchase
of a significant data set in 2005. The 2004 period had a higher than normal
level of participation surveys delivered, due to the late delivery of a
program that had been scheduled to be delivered at the end of 2003.
LiDAR Segment
LiDAR revenue for the fourth quarter of 2005 decreased by 4.7% to
$2.0 million compared to revenue for the fourth quarter of 2004 of
$2.1 million, and reached a year-end total of $8.5 million in 2005. The 2004
year-end total was $3.9 million; however, this total does not reflect a full
year of operations as the LiDAR business was acquired on May 26, 2004.
Trango Segment
Revenue for 2005 increased 1.3% to $1.5 million in 2005 from $1.4 million
in 2004. For the fourth quarter of 2005 the revenue of $390,000 was a decrease
of 52.4% from the $820,000 generated in the fourth quarter of 2004. In the
fourth quarter of 2004 Trango was successful in securing several large
contracts with clients in the United States. By the end of 2005 Trango was in
the process of negotiating several significant contracts which were
subsequently signed in early 2006.
Corporate and Other Segment
The corporate and other segment consists primarily of Pulse's corporate
G&A costs, interest and items such as inter-company eliminations and foreign
exchange gains and/or losses.
Data Library
Pulse acquires seismic data to grow its data library through two primary
methods. The Company conducts participation surveys each year, and also
purchases complementary seismic data when the opportunity arises to acquire
the proprietary rights. During 2005, Pulse invested $26.8 million to acquire
new seismic data. In the second quarter of 2005 the Company paid $15.2 million
to purchase the proprietary rights to approximately 2,500 net square
kilometres of 3D seismic data and 500 net kilometres of 2D seismic data,
located in the south-central area of Alberta. Additionally, in the first half
of 2005, the Company invested $5.5 million to acquire 244 net square
kilometres of 3D data through two participation surveys in northern Alberta.
In the fourth quarter of 2005 Pulse spent an additional $6.0 million to
acquire 174 net square kilometres of 3D data through two participation surveys
in west-central Alberta. In comparison, the Company spent $24.8 million on
participation surveys in 2004. This amount included $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, which
was converted to data library additions in 2004 with the delivery of the data
in February and March 2004.
Liquidity, Capital Resources and Capital Requirements
At December 31, 2005 the working capital position of Pulse, including the
current portion of long-term debt of $6.1 million, was $17.0 million, compared
to $3.8 million at December 31, 2004. The year-over-year working capital
position has improved by 342% as a result of increased accounts receivable
relating to the high level of seismic data library sales achieved late in the
year and a significant cash balance achieved through a successful seismic data
library sales year. Subsequent to year end, the Company collected
approximately $11 million of the December 31, 2005 accounts receivable
balance. A significantly lower amount of cash was invested into participation
surveys than in 2004, leaving the capital available as current working capital
as opposed to converting it into a non-current data library asset.
With the continued trend of very strong seismic data sales levels, Pulse
management expects that its funds from operations will be sufficient to
finance operations, service debt, and pay dividends and budgeted capital
expenditures through 2006. The seismic data library is continually growing
through the acquisition of new seismic data - principally 3D. The ongoing
growth in the Company's seismic data library continues to position Pulse as a
leading provider of valuable seismic data to industry participants well into
the future. Historical data sales analysis shows that most seismic data
retains its value for many years. Combined 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. The business of
Terrapoint is growing and significant market opportunities have been
identified. Management is focusing on new ways to tap into a greater share of
this growth industry.
Although quarterly results can show significant swings in working capital
because of participation surveys, Pulse remains liquid. The capital-intensive
nature of the seismic business is such that working capital deficiency
balances can accumulate during the busy participation survey season, only to
be reversed upon delivery of the seismic data to survey participants. In order
to limit risk in participation surveys, the Company does not generally proceed
with a participation survey without obtaining minimum pre-funding commitments
from clients. Because Pulse's largest expense in any given period in non-cash
amortization expense, funds from operations are usually much higher than net
earnings.
PULSE DATA INC.
Consolidated Balance Sheets
December 31, 2005 and 2004
(In thousands of dollars)
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2005 2004
-------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 11,909 $ 3,827
Accounts receivable 20,594 12,832
Prepaid expenses 316 234
Work in progress 993 693
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33,812 17,586
Long-term receivable 800 -
Data libraries 80,256 75,008
Participation surveys in progress 192 2
Property and equipment 13,859 15,042
Investments 432 667
Deferred charges 218 121
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$129,569 $108,426
-------------------------------------------------------------------------
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,748 $ 4,466
Deferred revenue 4,000 3,613
Current portion of long-term debt 6,068 5,662
-----------------------------------------------------------------------
16,816 13,741
Long-term debt 20,772 11,203
Future income taxes 9,549 5,975
Shareholders' equity:
Share capital 51,808 50,531
Contributed surplus 1,079 449
Retained earnings 29,545 26,527
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82,432 77,507
Commitments
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$129,569 $108,426
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PULSE DATA INC.
Consolidated Statements of Earnings and Retained Earnings
Years ended December 31, 2005 and 2004
(In thousands of dollars, except per share data)
-------------------------------------------------------------------------
2005 2004
-------------------------------------------------------------------------
Revenue $ 54,592 $ 50,992
Operating expenses:
Amortization of data libraries 21,536 22,862
Operating 11,085 6,583
Depreciation and amortization 2,693 1,615
-----------------------------------------------------------------------
35,314 31,220
-------------------------------------------------------------------------
Gross margin 19,278 19,932
General and administrative expenses 6,688 4,215
Research and development expenses 1,169 1,256
Interest:
Long-term debt 1,300 1,039
Other (290) 242
-----------------------------------------------------------------------
1,010 1,281
-------------------------------------------------------------------------
Earnings before income taxes 10,411 13,180
Income taxes:
Current 349 950
Future 3,574 4,511
-----------------------------------------------------------------------
3,923 5,461
-------------------------------------------------------------------------
Net earnings $ 6,488 $ 7,719
Retained earnings, beginning of year $ 26,527 $ 21,027
Dividends paid (3,470) (2,219)
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Retained earnings, end of year $ 29,545 $ 26,527
-------------------------------------------------------------------------
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Earnings per share, basic and diluted $ 0.14 $ 0.18
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PULSE DATA INC.
Consolidated Statements of Cash Flows
Years ended December 31, 2005 and 2004
(In thousands of dollars)
-------------------------------------------------------------------------
2005 2004
-------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings $ 6,488 $ 7,719
Items not involving cash:
Amortization of data libraries 21,536 22,862
Depreciation and amortization 2,693 1,615
Unrealized gain on foreign exchange (107) (276)
Future income taxes 3,574 4,511
Stock-based compensation 813 425
Other 20 (80)
-----------------------------------------------------------------------
Funds from operations 35,017 36,776
Net change in non-cash working capital items
related to operations (4,157) (5,989)
Decrease in non-current deferred revenue - (324)
-----------------------------------------------------------------------
30,860 30,463
Financing:
Long-term debt 15,439 -
Repayment of long-term debt (5,464) (4,624)
Issue of share capital 1,094 810
Dividends paid (3,470) (2,219)
Increase in deferred charges (145) (44)
-----------------------------------------------------------------------
7,454 (6,077)
Investing:
Additions to data libraries through participation
surveys (11,559) (24,788)
Seismic data purchases (15,225) (1,295)
(Increase) decrease in participation surveys
in progress (190) 8,436
Decrease in investments 235 216
Additions to property and equipment (1,510) (574)
Business acquisition - (2,142)
Net change in non-cash working capital items
related to investing (1,983) (9,430)
-----------------------------------------------------------------------
(30,232) (29,577)
-------------------------------------------------------------------------
Increase (decrease) in cash position 8,082 (5,191)
Cash and cash equivalents, beginning of year 3,827 9,018
-------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 11,909 $ 3,827
-------------------------------------------------------------------------
-------------------------------------------------------------------------
During the year the Corporation paid interest of $1,284,000 (2004 -
$1,350,000) and received interest of $137,000 (2004 - $61,000). During
the year the Corporation paid income taxes of $177,000 (2004 -
$1,137,000)
-------------------------------------------------------------------------
Year ended Seismic Corporate
December 31, 2005 Data LiDAR Trango and Other Total
-------------------------------------------------------------------------
Revenue
Data library sales $ 34,905 $ - $ - $ - $ 34,905
Participation surveys 10,006 - - - 10,006
LiDAR - 8,452 - - 8,452
Trango - - 1,455 - 1,455
Corporate and other - - - (226) (226)
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Total revenue 44,911 8,452 1,455 (226) 54,592
Amortization 21,360 176 - - 21,536
-------------------------------------------------------------------------
Segment profit (loss),
before undernoted 23,551 8,276 1,455 (226) 33,056
Operating expenses 3,399 6,306 1,588 (208) 11,085
General and
administrative - 1,850 117 4,721 6,688
Depreciation - 2,325 78 290 2,693
Research and
development - 1,169 - - 1,169
Interest expense - 3 - 1,007 1,010
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Earnings (loss) before
income taxes $ 20,152 $ (3,377) $ (328) $ (6,036) $ 10,411
-------------------------------------------------------------------------
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Total assets $109,562 $ 17,006 $ 1,437 $ 1,564 $ 129,569
-------------------------------------------------------------------------
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Capital expenditures $ 26,974 $ 567 $ 16 $ 927 $ 28,484
-------------------------------------------------------------------------
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Year ended Seismic Corporate
December 31, 2004 Data LiDAR Trango and Other Total
-------------------------------------------------------------------------
Revenue
Data library sales $ 25,674 $ - $ - $ - $ 25,674
Participation surveys 19,916 - - - 19,916
LiDAR - 3,886 - - 3,886
Trango - - 1,437 - 1,437
Corporate and other - - - 79 79
-------------------------------------------------------------------------
Total revenue 45,590 3,886 1,437 79 50,992
Amortization 22,760 102 - - 22,862
-------------------------------------------------------------------------
Segment profit (loss),
before undernoted 22,830 3,784 1,437 79 28,130
Operating expenses 2,720 2,707 1,357 (201) 6,583
General and
administrative - 895 160 3,160 4,215
Depreciation - 1,299 103 213 1,615
Research and
development - 1,256 - - 1,256
Interest expense - 17 - 1,264 1,281
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Earnings (loss) before
income taxes $ 20,110 $ (2,390) $ (183) $ (4,357) $ 13,180
-------------------------------------------------------------------------
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Total assets $ 88,418 $ 16,393 $ 1,358 $ 2,257 $108,426
-------------------------------------------------------------------------
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Capital expenditures $ 17,647 $ 224 $ 17 $ 333 $ 18,221
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OUTLOOK
Activity levels in the oil and gas industry have been robust over the
last few years due to the strong commodity pricing environment. This high
level of activity is expected to continue through 2006, and consequently the
demand for seismic data, which plays an integral role in the early stages of
exploration and development drilling activity, will continue to remain
healthy. In addition, with further industry exploration and development
activity targeted for northern Alberta and British Columbia, the demand for
Pulse's participation survey programs is also expected to be strong.
The LiDAR business segment did not meet financial and operating
expectations in 2005 due primarily to the low reliability and productivity
from the high-range LiDAR systems. In the first quarter of 2006, corrective
steps have been taken through new sales and marketing initiatives and new
product development which are expected to significantly improve the
reliability and capacity of the high range systems, and in turn improve the
financial results of this business segment.
In 2005, Trango made significant inroads into the United States
marketplace, and through its growing reputation for providing quality
exploration data management products and services, has increased its market
share. Trango has provided a quality product to Pulse that efficiently manages
the Company's seismic data library requirements; however, it remains a non-
core commercial business of Pulse, and the Company has initiated a program to
review a potential restructuring or monetization of Trango in 2006.
By focusing on its core seismic business, Pulse has significantly
strengthened its balance sheet in 2005 through the generation of a record
level of free cash flow. With confidence that free cash flow levels will
continue to be generated by the Company's quality asset base, the Company
announced on February 14, 2006 a 50% increase in the annual dividend rate to
$0.15 per common share.
CORPORATE PROFILE
Pulse is a Calgary-based company specializing in data ownership through
acquisition, marketing and information management, with a 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
9,400 net square kilometres of 3D data. Cash is generated through licensing of
our seismic data library to the oil and gas industry in Western Canada.
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 for the year ended December 31, 2005
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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