TSX Symbol - PSD
CALGARY, May 10 /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, 2006.
Mr. MacDonald is also pleased to announce that Pulse has declared its
twelfth consecutive quarterly dividend. This dividend is $0.0375 per common
share and will be paid on June 20, 2006 to shareholders of record at the close
of business on June 6, 2006. The Company's Dividend Reinvestment Plan for
eligible shareholders will be available for this dividend.
HIGHLIGHTS
- Seismic data library sales increased by 74 percent to $10.1 million
for the three months ended March 31, 2006 compared to $5.8 million
for the first quarter of 2005.
- Free cash flow(1) for the first quarter of 2006 was $6.4 million,
compared to $253,000 in the first quarter of 2005.
- Pulse had a working capital position of $20.1 million (including cash
of $20.2 million) at March 31, 2006 compared to $17.0 million at
December 31, 2005 and $1.7 million at March 31, 2005.
- Pulse had no participation survey revenue in the first quarter of
2006; however, the seismic division is currently conducting a
224 square kilometre 3D participation survey which is expected to be
completed and delivered in the second quarter.
- Pulse's LiDAR segment incurred a loss before income taxes of
$2.3 million, which included a $1.2 million additional depreciation
provision on certain capital assets.
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Financial Highlights
($000s except per share data)
3 Months Ended Year Ended
March 31, December 31,
-----------------------------------
2006 2005 2005
----------------------- -----------
(unaudited) (audited)
Revenue:
Data library sales $ 10,098 $ 5,793 $ 34,905
Participation surveys $ - $ 4,963 $ 10,006
LiDAR $ 1,453 $ 1,480 $ 8,452
Trango & other $ 238 $ 298 $ 1,229
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Total revenue $ 11,789 $ 12,534 $ 54,592
Amortization of data libraries $ 4,723 $ 6,134 $ 21,536
Net earnings $ 39 $ 724 $ 6,488
Net earnings per share:
Basic and diluted $ 0.00 $ 0.02 $ 0.14
Funds from operations(1) $ 6,314 $ 6,350 $ 35,017
Funds from operations per share(1):
Basic $ 0.14 $ 0.14 $ 0.76
Diluted $ 0.13 $ 0.14 $ 0.75
Free cash flow(1) $ 6,408 $ 253 $ 23,458
Working capital $ 20,075 $ 1,672 $ 16,996
Total assets $ 126,226 $ 108,476 $ 129,569
Capital expenditures:
Seismic data purchases $ - $ - $ 15,225
Participation surveys $ (94) $ 6,097 $ 11,559
Changes to work in progress $ 932 $ (2) $ 190
Property & equipment additions $ 148 $ 431 $ 1,510
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Total capital expenditures $ 986 $ 6,526 $ 28,484
Long-term debt (net of current
maturities) $ 19,322 $ 9,558 $ 20,772
Shareholders' equity $ 81,214 $ 77,816 $ 82,432
Weighted average shares outstanding:
Basic 46,612,473 45,774,816 46,161,608
Diluted 47,687,104 46,560,743 46,842,744
Shares outstanding at period-end 46,676,444 45,774,816 46,559,778
Dividends per share $ 0.0375 $ 0.125 $ 0.025
(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
3D in net square kilometres 9,442 6,763 9,442
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 defines funds from operations 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 three months ended March 31, 2006 were $39,000
($0.00 per share diluted), compared to $724,000 ($0.02 per share diluted) for
the first quarter in 2005. Funds from operations for the first three months of
2006 were $6.3 million ($0.13 per share diluted), compared to $6.4 million
($0.14 per share diluted) generated for the three months ended March 31, 2005.
These per share figures are based on the weighted average diluted shares
outstanding of 47,687,104 for the first quarter of 2006, compared to
46,560,743 for the first quarter of 2005.
Revenue
For the three months ended March 31
(stated in thousands of dollars)
-------------------------------------------------------------------------
2006 2005
-----------------------------------------------
% of % of
Business Total Total %
Segment Revenue Revenue Revenue Revenue Change
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Seismic Data:
-------------------------------------------------------------------------
Data
library
sales $ 10,098 85.7 $ 5,793 46.3 74.3
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Participation
surveys - - 4,963 39.7 (100.0)
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LiDAR 1,453 12.3 1,480 11.8 (1.8)
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Trango 287 2.4 399 3.2 (28.1)
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Corporate
and other (49) (0.4) (101) (1.0) 51.5
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Total $ 11,789 100 $ 12,534 100 (5.9)
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Seismic Data Segment
The seismic data segment, which includes data library sales and
participation survey revenues, contributed 85.7 percent of the Company's total
revenue in the first quarter of 2006, which is consistent with the same period
in 2005. For the three months ended March 31, 2006, Pulse recorded total
seismic segment revenue of $10.1 million compared to $10.8 million for the
same period in 2005.
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 library sales were $10.1 million for the first quarter of
2006, an increase of 74.3 percent from the $5.8 million for the first quarter
of 2005. This increase was due in part to higher demand for seismic data from
junior E&P companies engaged in exploration and in part to a greater
proportion of higher-priced 3D data sales in the first quarter of 2006
compared to the same period in 2005.
There was no revenue recorded for participation surveys during the first
quarter of 2006. The one participation survey in progress at March 31, 2006 is
expected to be delivered in the second quarter of 2006. In the first quarter
of 2005, two participation surveys were completed and delivered for recorded
revenue of $5.0 million.
LiDAR Segment
LiDAR revenue for the first quarter of 2006 remained consistent with
revenue for the first quarter of 2005.
Trango Segment
Revenue for the first quarter of 2006 decreased by 28 percent to $287,000
from $399,000 for the same period in 2005. Pulse's initiative to monetize
Trango in the first quarter has delayed implementation plans for its major
clients.
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 the first quarter of 2006, Pulse initiated a
224 square kilometre 3D participation survey in west central Alberta, which is
expected to be completed in the second quarter. In the first quarter of 2005,
the Company invested $6.1 million to complete two 3D participation surveys in
northern Alberta for a total addition to the data library of 241 square
kilometres of seismic data. There were no data purchases in either the first
quarter of 2005 or 2006.
The LiDAR data library acquired with Terrapoint includes approximately
$805,000 of data acquired in 2003, of which $483,000 remains unamortized at
March 31, 2006.
Liquidity, Capital Resources and Capital Requirements
At March 31, 2006 the working capital position of Pulse, including the
current portion of long-term debt of $5.9 million, was $20.1 million, compared
to $1.7 million at March 31, 2005. The year-over-year working capital position
has improved by 1,082 percent as a result of increased accounts receivable and
cash relating to the high level of seismic data library sales achieved during
the past twelve months. Subsequent to the 2005 year-end, the Company collected
$13.8 million of the December 31, 2005 accounts receivable. No cash was
invested in participation surveys in the first quarter of 2006.
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 throughout the remainder of 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. Terrapoint's business 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.
Quarterly results can show significant swings in working capital because
of the impact of participation surveys. 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 proceed with a
participation survey without obtaining minimum pre-funding commitments from
clients. Because Pulse's largest expense in any given period is non-cash
amortization expense, funds from operations are usually much higher than net
earnings.
PULSE DATA INC.
Interim Consolidated Balance Sheets
(In thousands of dollars)
-------------------------------------------------------------------------
March 31, December
2006 31,2005
(unaudited) (audited)
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Assets
Current assets:
Cash and cash equivalents $ 20,221 $ 11,909
Accounts receivable 15,385 20,594
Prepaid expenses 718 316
Work in progress 576 993
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36,900 33,812
Long-term receivable - 800
Data libraries 75,439 80,256
Participation surveys in progress 1,124 192
Property and equipment 12,132 13,859
Investments 432 432
Deferred charges 199 218
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$ 126,226 $ 129,569
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,199 $ 6,748
Deferred revenue 4,684 4,000
Current portion of long-term debt 5,942 6,068
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16,825 16,816
Long-term debt 19,322 20,772
Future income taxes 8,865 9,549
Shareholders' equity:
Share capital 52,081 51,808
Contributed surplus 1,299 1,079
Retained earnings 27,834 29,545
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81,214 82,432
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$ 126,226 $ 129,569
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PULSE DATA INC.
Interim Consolidated Statements of Earnings and Retained Earnings
Three months ended March 31,
(In thousands of dollars, except per share data)(unaudited)
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Revenue $ 11,789 $ 12,534
Operating expenses:
Amortization of data libraries 4,723 6,134
Operating 2,545 2,503
Depreciation and amortization 1,875 598
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9,143 9,235
-------------------------------------------------------------------------
Gross margin 2,646 3,299
General and administrative expenses 1,905 1,647
Research and development expenses 271 239
Interest:
Long-term debt 420 227
Other (70) (39)
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350 188
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Earnings before income taxes 120 1,225
Income taxes:
Current 765 1,778
Future (reduction) (684) (1,277)
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81 501
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Net earnings $ 39 $ 724
Retained earnings, beginning of period $ 29,545 $ 26,527
Dividends declared (1,750) (573)
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Retained earnings, end of period $ 27,834 $ 26,678
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Earnings per share, basic and diluted $ 0.00 $ 0.02
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PULSE DATA INC.
Interim Consolidated Statements of Cash Flows
Three months ended March 31,
(In thousands of dollars)(unaudited)
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2006 2005
-------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings $ 39 $ 724
Items not involving cash:
Amortization of data libraries 4,723 6,134
Depreciation and amortization 1,875 598
Unrealized loss on foreign exchange 38 13
Future income taxes (reduction) (684) (1,277)
Stock-based compensation 304 158
Other 19 -
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Funds from operations 6,314 6,350
Net change in non-cash working capital items
related to operations 4,862 4,701
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11,176 11,051
Financing:
Repayment of long-term debt (1,576) (1,440)
Issue of share capital 189 -
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(1,387) (1,440)
Investing:
Additions to data libraries through
participation surveys 94 (6,097)
(Increase) decrease in participation surveys
in progress (932) 2
Increase in investments - 235
Additions to property and equipment (148) (431)
Net change in non-cash working capital items
related to investing (491) (2,139)
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(1,477) (8,430)
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Increase in cash position 8,312 1,181
Cash and cash equivalents, beginning of period 11,909 3,827
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 20,221 $ 5,008
-------------------------------------------------------------------------
-------------------------------------------------------------------------
During the first quarter of the year the Corporation paid interest of
$350,000 (2005 - $232,000) and received interest of $82,000 (2005 - $26,000).
During the first quarter of the year the Corporation paid income taxes of
$225,000 (2005 - $51,000).
PULSE DATA INC.
Segmented Information
Three months ended March 31, 2006 and 2005
(Tabular amounts in thousands of dollars)
-------------------------------------------------------------------------
Three months
ended
March 31, Seismic Corporate
2006 Data LiDAR Trango and Other Total
-------------------------------------------------------------------------
Revenue
Data
library
sales $ 10,098 $ - $ - $ - $ 10,098
Partici-
pation
surveys - - - - -
LiDAR - 1,453 - - 1,453
Trango - - 287 - 287
Corporate
and other - - - (49) (49)
-------------------------------------------------------------------------
Total revenue 10,098 1,453 287 (49) 11,789
Amortization 4,679 44 - - 4,723
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Segment
profit
(loss),
before
undernoted 5,419 1,409 287 (49) 7,066
Operating
expenses 920 1,303 322 - 2,545
General and
administrative - 354 1 1,550 1,905
Depreciation - 1,768 14 93 1,875
Research and
development - 271 - - 271
Interest
expense - 9 - 341 350
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Earnings
(loss)
before
income taxes $ 4,499 $ (2,296) $ (50) $ (2,033) $ 120
-------------------------------------------------------------------------
Total assets $ 107,542 $ 14,630 $ 1,660 $ 2,394 $ 126,226
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital
expenditures $ 838 $ 97 $ - $ 51 $ 986
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months
ended
March 31, Seismic Corporate
2005 Data LiDAR Trango and Other Total
-------------------------------------------------------------------------
Revenue
Data
library
sales $ 5,793 $ - $ - $ - $ 5,793
Partici-
pation
surveys 4,963 - - - 4,963
LiDAR - 1,480 - - 1,480
Trango - - 399 - 399
Corporate
and other - - (101) (101)
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Total revenue 10,756 1,480 399 (101) 12,534
Amortization 6,089 45 - - 6,134
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Segment profit
(loss),
before
undernoted 4,667 1,435 399 (101) 6,400
Operating
expenses 704 1,352 498 (51) 2,503
General and
administrative - 448 - 1,199 1,647
Depreciation - 544 19 35 598
Research and
development - 239 - - 239
Interest
expense - - - 188 188
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Earnings
(loss)
before
income taxes $ 3,963 $ (1,148) $ (118) $ (1,472) $ 1,225
-------------------------------------------------------------------------
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Total assets $ 89,899 $ 16,033 $ 1,303 $ 1,241 $ 108,476
-------------------------------------------------------------------------
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Capital
expenditures $ 6,095 $ 290 $ 6 $ 135 $ 6,526
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OUTLOOK
Based on continued strong commodity prices and increased oil and gas
exploration activity in western Canada, Pulse expects high demand for both
existing seismic data and new data throughout 2006. We will continue to add
high quality seismic data to our data library throughout 2006.
Terrapoint has not produced the financial results we anticipated. We have
spent a tremendous amount of effort to revamp and restructure its entire
operations. The weakest part of Terrapoint's operations has been the high-
range data collection systems, which require high maintenance and offer low
reliability. These systems were part of the purchase of assets from the United
States operations of Mosaic and were developed outside of our existing R&D
group. While the base technology and science incorporated into these systems
was sound and held promise for future development, the operational design was
not conducive to a high production environment.
In late March 2006, we purchased a new Optech 3100 high-range LiDAR
system. This equipment was put into operation in mid-April and as a result of
the operational efficiency presented by this new system we have made the
decision to no longer maintain or repair four older high-range systems during
2006 and lay off the engineering staff associated with its development. One
system was retired in the first quarter, resulting in an additional
depreciation provision of $1.2 million. While the remaining three older high-
range systems continue to operate or to be capable of operating, we will
continue to review the useful economic life of these systems, and we
anticipate that depreciation relating to these systems may be accelerated.
While this strategy will hurt short-term net earnings, it will increase
production, competitiveness and reliability of our high-range business and
bring gross profit margins in line with the low-range sector of this business
which has exceeded expectations.
The research and development effort during the last half of 2005 and
early 2006 in Terrapoint has concentrated on developing a new mobile vehicle-
mounted LiDAR system, TITAN, that we anticipate will be in production during
the third quarter of this year. This system will target a large new market
that, as yet, has not seen the benefits of LiDAR technology. TITAN is designed
to be vehicle-mounted and to produce survey-grade digital elevation models of
existing roadways, railways and shorelines. Specifications include the ability
to survey at highway speeds, with a 360-degree field of view using a tightly
coupled GPS/INS solution to provide accurate data in obstructed environments
Our strategy in the last year has resulted in a very strong balance sheet
with more than $20 million in cash and a strong working capital position. Our
core seismic business has performed very well and we expect it to continue to
generate very good levels of cash data sales. While we have suffered some
setbacks with the Terrapoint older high-range systems, we have addressed the
problem and are confident in the investment we have made in both internal R&D
and new technology.
We would like to thank all employees and Board members for their
dedication and resourcefulness.
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 estimates change.
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