TSX Symbol - PSD
CALGARY, May 7 /CNW/ - Douglas Cutts, 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, 2008.
Mr. Cutts is also pleased to announce that Pulse has declared its twentieth consecutive quarterly dividend. This dividend is $0.05 per common share and will be paid on June 20, 2008 to shareholders of record at the close of business on June 6, 2008. The Company's Dividend Reinvestment Plan for eligible shareholders will be available for this dividend.
A conference call to review the third quarter results has been scheduled for 1:00 pm EDT (11:00 am MDT) on Thursday May 8, 2008. The conference call dial-in number is 1-800-590-1817 and (416) 644-3426 (Toronto). A live webcast of the conference call will be available at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)2249500.
HIGHLIGHTS
- $7.8 million in seismic data library sales in Q1 2008 compared to a
record first quarter set in Q1 2007 of $10.6 million. This decrease
was a result of reduced industry activity during the quarter. The
Q1 2008 seismic data sales represents the third-strongest first
quarter in Pulse's history.
- Cash EBITDA(b) from continuing operations for the three month period
ended March 31, 2008 was $5.9 million compared to $8.7 million for
the same period in 2007.
- Improved working capital position to $11.8 million (including cash of
$9.0 million) at March 31, 2008 compared to $5.6 million (including
cash of $9.2 million) at March 31, 2007.
- Net loss from continuing operations in the first quarter of 2008 was
$1.0 million ($0.02 per share basic and diluted) compared to net
earnings of $837,000 ($0.02 per share basic and diluted) in the first
quarter of 2007 as a result of a high fixed seismic data library
amortization expense of $6.6 million (a non-cash expense) and lower
seismic data library sales.
- In the first quarter of 2008 the Company purchased and cancelled
178,300 common shares at an average price of $2.59 per share through
the normal course issuer bid at a total cost of $462,000.
- On April 1, 2008 Pulse announced that it had signed a definitive
agreement to sell its Terrapoint business unit. On April 30, 2008 the
Company announced that the closing had been delayed pending receipt
of government approvals.
- Subsequent to the end of Q1 2008 Pulse purchased and cancelled
1,230,000 common shares at $2.75 per share (before brokerage fees)
under the normal course issuer bid, for a total cost of $3.4 million.
- Subsequent to the end of Q1 2008 the Company purchased two seismic
datasets totalling 142 net square kilometres of 3D seismic data
located within the general Bakken trend of southeast Saskatchewan and
also covering portions of the prolific Wild River Field located in
northwest Alberta.
Financial Highlights
($000s except per share data
and number of shares)
3 months ended Year ended
March 31, December 31,
---------------- -------------
2008 2007 2007
---- ---- ----
(unaudited)
Revenue from continuing operations:
Data library sales $ 7,829 $ 10,623 $ 41,215
Participation surveys - - 3,010
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Total revenue from continuing
operations $ 7,829 $ 10,623 $ 44,225
Amortization of seismic data
library $ 6,646 $ 6,228 $ 28,345
Net earnings (loss) from continuing
ops. $ (1,009) $ 837 $ 2,511
Net earnings (loss) from continuing
ops. per share:
Basic and diluted $ (0.02)(a) $ 0.02 $ 0.05
Loss for the period $ (1,441) $ (470) $ (4,982)
Loss per share:
Basic and diluted $ (0.03)(a) $ (0.01)(a) $ (0.10)(a)
Funds from continuing operations
(b) $ 5,456 $ 7,850 $ 31,208
Funds from continuing operations
per share (b):
Basic and diluted $ 0.10 $ 0.16 $ 0.61
Cash EBITDA(b) $ 5,892 $ 8,715 $ 33,038
Working capital:
Cash $ 8,964 $ 9,213 $ 6,528
Non-cash working capital 10,823 4,410 13,735
Current portion of long-term
debt (8,004) (8,004) (8,004)
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Total working capital $ 11,783 $ 5,619 $ 12,259
Total assets $ 118,725 $ 126,682 $ 124,473
Capital expenditures:
Seismic data purchases $ - $ - $ 11,738
Participation surveys - - 6,979
Property & equipment additions 350 74 422
Total capital expenditures $ 350 $ 74 $ 19,139
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Total long-term debt $ 29,578 $ 37,451 $ 31,547
Shareholders' equity $ 74,916 $ 73,640 $ 79,174
Weighted average shares
outstanding:
Basic 54,448,918 47,929,831 50,828,071
Diluted 54,833,580 48,372,833 51,378,310
Shares outstanding at period end 54,437,489 47,935,342 54,481,601
(a) Basic weighted average shares outstanding are used to calculate loss
per share
(b) These non-GAAP financial measures are defined in the Financial
Summary below.
Operational Highlights
Seismic library:
2D in net kilometres 257,281 257,216 257,281
3D in net square kilometres 11,607 9,823 11,607
FINANCIAL SUMMARY
The Company's continuous disclosure documents provide discussion and analysis of "cash EBITDA", "funds from operations" and "funds from operations per share". These financial measures do not have standard definitions prescribed by GAAP in Canada and, therefore, may not be comparable to similar measures disclosed by other companies. The Company has included these non-GAAP financial measures because management, investors, analysts and others use them as measures of the Company's financial performance. The Company's definition of cash EBITDA is cash available for interest payments, cash taxes if applicable, debt servicing, discretionary capital expenditures and the payment of dividends, and is calculated as earnings before interest, taxes, depreciation and amortization less participation survey revenue, plus non-cash and non-recurring G&A expenses. The Company's definition of funds from operations is cash flow from operations as prescribed by Canadian GAAP 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.
Overview
Total seismic revenue for the three months ended March 31, 2008 was $7.8 million compared to the record $10.6 million for the first quarter of 2007. In both periods seismic revenue was comprised entirely of seismic data library sales as no participation surveys were delivered during either first quarter. The most recent quarterly result represents a 26.3 percent decrease in total seismic revenue for the three-month period.
The net loss from continuing operations for the three months ended March 31, 2008 totalled $1.0 million ($0.02 per share basic and diluted), compared to net earnings from continuing operations of $837,000 ($0.02 per share basic and diluted) for the same period in 2007. This decrease was due primarily to two factors. First, seismic data library sales were down due to the effects of oil and natural gas companies assessing the impact of the new Alberta royalty program on their operations and capital expenditures. Second, there was an increase in the non-cash amortization expense in the three-month period ended March 31, 2008 over the same period in 2007, resulting from significant seismic data acquisitions in 2007.
For the first quarter of 2008 the loss from discontinued operations net of income taxes was $432,000, compared to a loss of $1.3 million for the same period in 2007. The most significant items affecting the Terrapoint business unit's results in the first quarter of 2008 were an increase in revenue of $1.3 million, partially offset by a $207,000 write-down of Terrapoint's assets, and increased general and administrative costs relating to the pending sale of the Terrapoint business unit.
The loss for the three months ended March 31, 2008 was $1.4 million ($0.03 per share basic and diluted) compared to a loss of $470,000 ($0.01 per share basic and diluted) for the same period in 2007. The significant factors contributing to this $1.0 million increase in the loss for the three-month period were lower seismic data library sales and increased seismic data library amortization expense as noted above, partially offset by decreased income tax expense and a decreased loss from discontinued operations. When calculating the loss per share for the three months ended March 31, 2008 and 2007, the basic number of shares outstanding was utilized as using diluted shares would have the effect of inappropriately decreasing the loss per share.
Funds from continuing operations for the first three months of 2008 totalled $5.5 million ($0.10 per share basic and diluted) compared to $7.9 million ($0.16 per share basic and diluted) for the first three months of 2007.
Cash EBITDA for the first three months of 2008 was $5.9 million, compared to cash EBITDA of $8.7 million for the first three months of 2007. This 32.4 percent period-over-period decrease in cash EBITDA is attributable to the period-over-period decrease of 26.3 percent in total seismic revenue.
At March 31, 2008, Pulse had working capital of $11.8 million (including cash of $9.0 million) compared to working capital of $5.6 million (cash of $9.2 million) at March 31, 2007 and working capital of $12.3 million (cash of $6.5 million) at December 31, 2007. In each period, working capital includes $8.0 million of current portion of long-term debt.
During the three months ended March 31, 2008, the Company purchased and cancelled 178,300 common shares under its normal course issuer bid at an average price of $2.59 per share, for a total cost of $462,000. On May 1, 2008 the Company purchased and cancelled 1,230,000 common shares at $2.75 per share (before brokerage fees) under the normal course issuer bid for a total cost of $3.4 million.
Pulse paid its nineteenth consecutive quarterly dividend on April 20, 2008. The dividend was $0.05 per share.
Liquidity, Capital Resources and Capital Requirements
At March 31, 2008 the working capital position of Pulse, including the current portion of long-term debt of $8.0 million, was $11.8 million, compared to $12.3 million at December 31, 2007. For the three months ended March 31, 2008 Pulse generated $5.5 million in funds from continuing operations, had a negative net change in non-cash working capital items relating to continuing operations of $242,000, and utilized working capital for long-term debt repayment ($2.0 million) and to finance its Terrapoint business unit ($191,000). Additionally, the Company acquired $350,000 of property and equipment, purchased $462,000 of its own shares through its normal course issuer bid program and received cash of $226,000 on the exercise of stock options. All of these items resulted in an increase from December 31, 2007 of $2.4 million to the cash balance of $9.0 million at March 31, 2008.
Pulse's management expects that the Company's funds from operations will be sufficient to finance future operations, service debt, pay dividends and fund budgeted capital expenditures through 2008. The ongoing annual growth in the Company's seismic data library continues to position Pulse to be 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. Utilizing the recent technological advancements in data reprocessing, the Company's clients are able to enhance the quality of older seismic data in the Company's library.
Because Pulse's largest expense in any given period is non-cash amortization expense, funds from operations are consistently significantly higher than net earnings. Even though the high fixed amortization expense in the first quarter of 2008, combined with lower seismic data sales contributed to a quarterly loss, the funds from operations of $5.5 million and cash EBITDA of $5.9 million show Pulse's ability to finance operations and its growth strategy.
OUTLOOK
Although first-quarter 2008 seismic data sales were down year-over-year, the decline came after an all-time first quarter record in 2007, and first quarter 2008 seismic data sales in fact represented the third-strongest first quarter in Pulse's history. This outcome supports Pulse's view that industry spending on seismic data tends to be less commodity price-sensitive and volatile than other categories of capital spending in the energy services sector. The oil and natural gas industry's initial reaction to the Government of Alberta's announcement in October 2007 of higher oil and natural gas royalties beginning in 2009 was cause for concern, as the lower seismic revenues generated in the first quarter of 2008 were largely attributable to the reduction of capital spending and related reduced industry activity that followed this announcement.
However, Pulse has a positive outlook for the remainder of 2008. Although some uncertainty continues to surround capital expenditure plans of exploration and production companies, counterbalancing this uncertainty are several positive trends. Industry forecasts for the second quarter of 2008 and for the year as a whole are being revised upwards. The Petroleum Services Association of Canada in April raised its drilling forecast for 2008 from 14,500 to 16,500 wells, and some analysts expect the higher figure to be exceeded.
In addition, after a two-year period of weakness, the recovery in natural gas prices began in the first quarter of 2008 and accelerated in the second quarter, with the Nymex natural gas futures price approaching $11 per mmbtu in late April, 2008. In early April the Government of Alberta announced revisions to its new royalty program that will partially restore deep oil and natural gas drilling incentives. This announcement removed an important element of uncertainty and improved the economics of deep wells drilled in 2009 and beyond. Finally, strong successes experienced in exploratory drilling of several large unconventional natural gas and crude oil plays (including areas for which Pulse provides seismic coverage) are generating industry excitement and motivating new activities by competing companies. All of these factors bode well for seismic data demand as well as increased demand for new participation surveys.
Overall, Pulse continues to expect that demand for licensed seismic data for the balance of 2008 will be on-trend with prior years. As at April 30, 2008, data library sales year-over-year, are within $1 million of the April 30, 2007 record seismic data sales level. Combined with growth in the size of the library, this should enable Pulse to generate solid levels of revenue and cash EBITDA. The Company is committed to maintaining a strong balance sheet to continually seek opportunities to grow its seismic data library through strategic data acquisitions and additional seismic participation surveys. The Corporation expects to be working on its first participation survey of 2008 by June. Pulse's 2008 budget also calls for continuing the share buyback program and continuing to pay cash dividends.
CORPORATE PROFILE
Pulse is a market leader in the acquisition, marketing and licensing of 2D and 3D seismic data to the western Canadian energy sector. Pulse owns the second-largest licensable seismic data library in Canada, currently consisting of approximately 257,300 net kilometres of 2D seismic and 11,600 net square kilometres of 3D seismic. The library extensively covers the Western Canada Sedimentary Basin where most of Canada's oil and natural gas exploration and development occurs.
Pulse has publicly traded on the TSX since 2001. The Company has paid its shareholders a quarterly dividend since 2003 and at Pulse's current share price provides one of the highest dividend yields on the TSX.
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 most recent annual and 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 estimates change, except as required by securities laws.
PULSE DATA INC.
Interim Consolidated Balance Sheets
(In thousands of dollars)
(unaudited)
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March 31, December 31,
2008 2007
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Assets
Current assets:
Cash and cash equivalents $ 8,964 $ 6,528
Accounts receivable 13,024 14,686
Prepaid expenses and deposits 770 425
Assets held for sale 4,724 5,426
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27,482 27,065
Seismic data library 84,414 91,060
Assets held for sale 5,821 5,629
Property and equipment 952 663
Other 56 56
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$ 118,725 $ 124,473
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 1,276 $ 2,178
Dividends payable 2,722 -
Deferred revenue 2,240 2,897
Current portion of long-term debt 8,004 8,004
Liabilities held for sale 1,457 1,727
15,699 14,806
Long-term debt 21,574 23,543
Future income taxes 6,536 6,950
Shareholders' equity:
Share capital 72,515 72,463
Contributed surplus 1,585 1,508
Retained earnings 816 5,203
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74,916 79,174
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$ 118,725 $ 124,473
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PULSE DATA INC.
Interim Consolidated Statements of Earnings (Loss) and Retained Earnings
Three months ended March 31,
(In thousands of dollars, except per share data) (unaudited)
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2008 2007
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Revenue $ 7,829 $ 10,623
Expenses:
Amortization of seismic data library 6,646 6,288
Operating 803 802
Depreciation and amortization 61 71
Unrealized loss on assets held for trading - 48
General and administrative expenses 1,306 1,351
Corporate transaction costs - 95
Interest:
Long-term debt 549 742
Other (112) (78)
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437 664
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Earnings (loss) from continuing operations
before income taxes (1,424) 1,304
Income taxes:
Current (recovery) - 69
Future (reduction) (415) 398
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(415) 467
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Net earnings (loss) from continuing operations (1,009) 837
Loss from discontinued operations,
net of income taxes (432) (1,307)
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Loss for the period (1,441) (470)
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Retained earnings, beginning of period 5,203 19,165
Change in accounting policy - 322
Normal course issuer bid (224) -
Dividends declared (2,722) (1,798)
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Retained earnings, end of period $ 816 $ 17,219
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Earnings (loss) per share from continuing
operations, basic and diluted $ (0.02) $ 0.02
Loss per share, basic and diluted $ (0.03) $ (0.01)
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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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2008 2007
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Cash provided by (used in):
Operations:
Net earnings (loss) from continuing
operations $ (1,009) $ 837
Items not involving cash:
Amortization of seismic data library 6,646 6,288
Depreciation and amortization 61 71
Unrealized loss on foreign exchange - (37)
Unrealized loss on assets held for trading - 48
Future income taxes (415) 398
Stock-based compensation 141 208
Other 32 37
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5,456 7,850
Net change in non-cash working capital items
related to continuing operations (94) 4,235
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Cash flow from continuing operations 5,362 12,085
Discontinued Operations:
Funds used in discontinued operations (516) (1,687)
Additions to property and equipment - (2,385)
Net change in non-cash working capital items
related to discontinued operations 325 1,073
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(191) (2,999)
Financing:
Repayment of long-term debt (2,001) (2,001)
Issue of share capital 226 21
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(1,775) (1,980)
Investing:
Normal course issuer bid (462) -
Additions to property and equipment (350) (74)
Net change in non-cash working capital items
related to investing (148) -
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(960) (74)
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Increase in cash position 2,436 7,032
Cash and cash equivalents, beginning of period 6,528 2,181
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Cash and cash equivalents, end of period $ 8,964 $ 9,213
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