TSX Symbol - PSD
CALGARY, Aug. 11 /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 and six months ended June 30, 2008.
Mr. Cutts is also pleased to announce that Pulse has declared its twenty first consecutive quarterly dividend. This dividend is $0.05 per common share and will be paid on September 19, 2008 to shareholders of record at the close of business on September 5, 2008. The Company's Dividend Reinvestment Plan for eligible shareholders will be available for this dividend.
A conference call to review the second quarter results has been scheduled for 1:00 pm EDT (11:00 am MDT) on Monday, August 11, 2008. The conference call dial-in number is 1 800-594-3790 and (416) 644-3420 (Toronto). A live webcast of the conference call will be available at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)2352240.
HIGHLIGHTS
- Record Q2 seismic data library sales and second-highest quarterly
data library sales in Pulse's history of $10.9 million for the three
months ended June 30, 2008 compared to $10.5 million in Q2 2007.
- Cash EBITDA(b) for the three months ended June 30, 2008 was
$8.8 million compared to $8.3 million for the same period in 2007.
- Working capital position of $12.3 million (including cash of
$11.3 million) at June 30, 2008 compared to $8.0 million (including
cash of $8.6 million) at June 30, 2007.
- Net earnings from continuing operations for the three month period
ended June 30, 2008 were $1.0 million ($0.02 per share basic and
diluted) compared to $336,000 ($0.01 per share basic and diluted) for
the same period in 2007.
- In the second quarter of 2008 the Company purchased and cancelled,
through the normal course issuer bid, 1,280,900 common shares at an
average price of $2.74 per share, before brokerage fees, at a total
cost of $3.5 million.
- In Q2 2008 the Company purchased three seismic datasets totalling 172
net square kilometres of 3D seismic data. The seismic data covers the
general Bakken trend of southeast Saskatchewan and also covers
portions of the prolific Wild River Field located in northwest
Alberta.
- On May 31, 2008 Pulse completed the sale of its Terrapoint business
unit with an effective date of March 31, 2008. The base purchase
price of $6.5 million cash included $3.0 million paid on closing and
the remaining $3.5 million to be paid within 13 months of closing.
- Pulse commenced one 3D participation survey in June 2008, and
commenced a second 3D participation survey in July 2008. Both surveys
are located in west-central Alberta and have a projected capital cost
of approximately $16.0 million. A portion of the data is scheduled to
be delivered in September, 2008, with the balance scheduled to be
delivered in October, 2008.
Financial Highlights
('000's except per share data)
3 months ended 6 months ended Year ended
June 30 June 30 Dec. 31
--------- --------- ---------
2008 2007 2008 2007 2007
------ ------ ------ ------ ------
(unaudited) (unaudited)
Revenue from
continuing
operations:
Data library
sales $ 10,895 $ 10,527 $ 18,724 $ 21,150 $ 41,215
Participa-
tion
surveys - - - - 3,010
-----------------------------------------------------------
Total revenue
from
continuing
operations $ 10,895 $ 10,527 $ 18,724 $ 21,150 $ 44,225
Amortization
of seismic
data library $ 6,582 $ 6,288 $ 13,228 $ 12,576 $ 28,345
Net earnings
from
continuing
ops. $ 1,030 $ 336 $ 21 $ 1,173 $ 2,511
Net earnings
from
continuing
ops. per
share:
Basic and
diluted $ 0.02 $ 0.01 $ 0.00 $ 0.02 $ 0.05
Net earnings
(loss) $ 1,168 $ (50) $ (273) $ (520) $ (4,982)
Net earnings
(loss) per
share:
Basic and
diluted $ 0.02 $ 0.00(a) $ (0.01)(a) $ (0.01)(a) $ (0.10)(a)
Funds from
continuing
operations
(b) $ 8,417 $ 6,481 $ 13,873 $ 14,331 $ 31,208
Funds from
continuing
operations
per share(b):
Basic $ 0.16 $ 0.13 $ 0.26 $ 0.30 $ 0.61
Diluted $ 0.15 $ 0.13 $ 0.25 $ 0.29 $ 0.61
Cash EBITDA
(b) $ 8,847 $ 8,252 $ 14,740 $ 16,967 $ 33,038
Working
capital:
Cash $ 11,287 $ 8,639 $ 11,287 $ 8,639 $ 6,528
Non-cash
working
capital 9,038 7,364 9,038 7,364 13,735
Current
portion of
long term
debt (8,004) (8,004) (8,004) (8,004) (8,004)
-----------------------------------------------------------
Total working
capital $ 12,321 $ 7,999 $ 12,321 $ 7,999 $ 12,259
Total assets $ 109,178 $ 121,996 $ 109,178 $ 121,996 $ 124,473
Capital
expenditures:
Seismic data
purchases $ 2,033 $ - $ 2,033 $ - $ 11,738
Partici-
pation
surveys - - - - 6,979
Changes to
work in
progress 823 - 823 - -
Property &
equipment
additions 149 115 499 189 422
-----------------------------------------------------------
Total capital
expenditures $ 3,005 $ 115 $ 3,355 $ 189 $ 19,139
Total long-
term debt $ 27,309 $ 35,482 $ 27,309 $ 35,482 $ 31,547
Shareholders'
equity $ 71,376 $ 72,256 $ 71,376 $ 72,256 $ 79,174
Weighted
average
shares
outstanding:
Basic 53,966,092 48,016,084 54,185,449 47,973,196 50,828,071
Diluted 54,453,982 48,857,668 54,568,475 48,603,615 51,378,310
Shares
outstanding
at period
end 53,822,950 48,070,787 53,822,950 48,070,787 54,481,601
(a) Basic weighted average shares outstanding are used to calculate loss
per share.
(b) These non-GAAP financial measures are defined below.
Operational Highlights:
Seismic library:
2D in net
kilometres 257,281 257,216 257,281 257,216 257,281
3D in net
square
kilometres 11,779 9,823 11,779 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
Seismic data library sales for the three months ended June 30, 2008 were $10.9 million. This represents an increase of 3 percent from $10.5 million of data library sales for the three months ended June 30, 2007, and is a new second-quarter seismic data library sales record for Pulse and represented the second-highest quarterly sales recorded in Pulse's history. Data library sales for the six months ended June 30, 2008 were $18.7 million, an 11 percent decrease from $21.2 million for the comparative period in 2007. The decrease for the first half of 2008 was due to reduced demand for seismic data in the first quarter from oil and natural gas companies, partially offset by the record second-quarter data library sales. The total seismic revenue in both periods was comprised strictly of data library sales, with no participation surveys delivered during the first half of either year.
Net earnings from continuing operations for the three months ended June 30, 2008 were $1.0 million ($0.02 per share basic and diluted) compared to $336,000 ($0.01 per share basic and diluted) for the comparable period in 2007. This improvement reflects higher data library sales for the period and a decrease in interest and general and administrative expenses, including corporate transaction costs. This was partially offset by higher seismic data library amortization expense.
Net earnings from continuing operations for the six months ended June 30, 2008 were $21,000 ($0.00 per share basic and diluted), compared to $1.2 million ($0.02 per share basic and diluted) for the same period in 2007. The reduction was due to a combination of factors including a decrease in revenue from data library sales in the first quarter and an increase in the amortization of the seismic data library. Amortization of the seismic data library was $13.2 million for the first half of 2008 compared to $12.6 million for the first half of 2007. The decrease in revenue in the first quarter and increase in data library amortization expense were partially offset by a decrease in general and administrative expenses, corporate transaction costs and interest expense, resulting in an overall decrease of $1.2 million in net earnings from continuing operations for the first half of 2008 from the comparable period in 2007.
Net earnings for the three months ended June 30, 2008 were $1.2 million ($0.02 per share basic and diluted) compared to a net loss of $50,000 ($0.00 per share basic and diluted) for the same period in 2007. The net loss for the six months ended June 30, 2008 was $273,000 ($0.01 per share basic and diluted) compared to a net loss of $520,000 ($0.01 per share basic and diluted) for the same period in 2007. When calculating the loss per share for the six months ended June 30, 2008 and 2007, and for the three months ended June 30, 2007 the basic number of shares outstanding was utilized, as using diluted shares would have the effect of inappropriately decreasing the net loss per share.
Funds from continuing operations for the three months ended June 30, 2008 were $8.4 million ($0.16 per share basic and $0.15 per share diluted), compared to $6.5 million ($0.13 per share basic and diluted) for the second quarter of 2007. Funds from continuing operations per share for the second quarter of 2008 and 2007 are based on the weighted average shares outstanding of 53,966,092 (diluted - 54,453,982) for the second quarter of 2008, compared to 48,016,084 (diluted - 48,857,668) for the comparable period in 2007.
Funds from continuing operations for the first six months of 2008 totalled $13.9 million ($0.26 per share basic and $0.25 per share diluted), compared to $14.3 million ($0.30 per share basic and $0.29 per share diluted) for the first six months of 2007. Funds from continuing operations per share for the first six months of 2008 and 2007 are based on the weighted average shares outstanding of 54,185,449 (diluted - 54,568,475) for the first six months of 2008, compared to 47,973,196 (diluted - 48,603,615) for the comparable period in 2007.
Cash EBITDA for the second quarter of 2008 was $8.8 million compared to cash EBITDA of $8.3 million for the same period in 2007, and cash EBITDA for the first half of 2008 was $14.7 million compared to cash EBITDA of $17.0 million for the first half of 2007.
Pulse had working capital of $12.3 million (including cash of $11.3 million) at June 30, 2008 compared to working capital of $8.0 million (including cash of $8.6 million) at June 30, 2007 and $12.3 million (cash of $6.5 million) at December 31, 2007. At each date working capital includes $8.0 million of current portion of long-term debt.
During the quarter ended June 30, 2008, the Company repurchased and cancelled 1,280,900 common shares under the normal course issuer bid at an average price of $2.74 per share, before brokerage fees, for a total cost of $3.5 million. This brought common shares repurchased and cancelled for the six months ended June 30, 2008 to a total of 1,459,200 shares at an average purchase price of $2.72 per share, before brokerage fees, for a total cost of approximately $4.0 million.
During the second quarter of 2008 Pulse purchased 172 net square kilometres of 3D seismic data in three separate acquisitions. The largest of the three was a 117 net square kilometre 3D dataset located in southeast Saskatchewan.
On June 20, 2008, Pulse paid its twentieth consecutive quarterly dividend. The dividend rate for the second quarter of 2008 was $0.05 per common share.
Liquidity, Capital Resources and Capital Requirements
At June 30, 2008 the working capital position of Pulse, including the current portion of long-term debt of $8.0 million, was $12.3 million, unchanged from December 31, 2007. For the six months ended June 30, 2008 Pulse generated $13.9 million in funds from continuing operations, had a positive net change of $3.6 million in non-cash working capital items relating to continuing operations and investing, generated $1.3 million from the exercise of stock options and had net cash flow from discontinued operations of $2.8 million. Pulse utilized working capital for long-term debt repayment of $4.0 million and for payment of dividends (net of DRIP receipts) of $5.1 million. Additionally, the Corporation purchased $2.0 million of seismic data, incurred $823,000 of participation survey costs which are reflected in work in process, acquired $499,000 of property and equipment, incurred $302,000 in deferred charges and purchased $4.0 million of its common shares through the Company's normal course issuer bid. All of these items resulted in an increase in cash from December 31, 2007 of $4.8 million to $11.3 million at June 30, 2008.
With the continued trend of strong seismic data library sales, Pulse's management expects that the Company's funds from operations will be sufficient to finance future operations, service debt, pay dividends and carry out the budgeted capital expenditures through 2008. The ongoing 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 data in the library.
OUTLOOK
Pulse has entered the second half of 2008 positioned as a pure-play seismic data library company providing 2D and 3D seismic to the oil and natural gas industry in western Canada. The benefits of divesting its non-core assets include enabling Pulse's management team and directors to focus their time and effort, as well as the Company's capital, on optimizing and growing the Company's core business.
The Company's success in generating the third-highest first-quarter data library sales revenue in its history amidst the energy industry's downturn, followed by a record-setting second quarter, indicates that Pulse's business model is working. The Company's revenue levels over the past seven quarters have reflected less volatility than the overall energy services sector, and generally confirms the Company's view that Pulse occupies a somewhat counter-cyclical niche within the capital spending dynamic of the oil and natural gas sector. By providing high-quality 2D and 3D seismic data in a form that is fast, convenient and cost-competitive, Pulse is able to continue attracting a significant share of the industry's capital spending even during times of tightened expenditures.
At present, oil and gas industry capital spending appears to have rebounded, extending an upward swing first detected late in the first quarter of 2008. Current field activities in western Canada include several large unconventional natural gas and crude oil plays, including areas in which Pulse provides seismic coverage. These areas have experienced strong exploratory results and are generating industry excitement and motivating new exploration. In May, the Canadian Association of Oilwell Drilling Contractors (CAODC) revised its 2008 drilling forecast from 13,735 wells to 18,000 wells with improved average utilization for the Canadian rig fleet. On July 25 the Petroleum Services Association of Canada (PSAC) sustained its previous upward revision of 16,500 wells for 2008, up from its initial forecast of 14,500 wells (though still below the more than 18,500 wells drilled in 2007). Oilfield drilling levels are generally indicative of overall industry capital spending and suggestive of exploration expenditures including seismic. The question of sustainability of these higher commodity price levels remains an important factor in the budgeting of exploration capital expenditures with many oil and natural gas companies.
Pulse's decision to seize the opportunity provided by moderating field costs and re-emphasize 3D seismic participation surveys has met with a strong positive response from the energy industry. Two new 3D participation surveys are currently underway and have a projected capital cost of approximately $16.0 million. Data delivery is scheduled for September and October of 2008. Pulse's participation survey program is being driven by a reorganized and expanded surveys department headed by an experienced manager hired in early 2008. The positive results to date create a strong possibility to conduct additional new participation surveys through the balance of 2008 and in 2009.
Concurrently, Pulse continues to actively seek opportunities to acquire existing high-quality seismic datasets which will result in increasing the Company's data library size and drive seismic data library sales which form Pulse's core business. This should enable Pulse to generate growing levels of revenue and cash EBITDA through the remainder of 2008. Financially Pulse is well-positioned for the second half of 2008, with a strong working capital position and ready access to additional outside capital, if needed, to support its planned growth strategy. The Company remains committed to maintaining a strong balance sheet, in support of its efforts to continually seek opportunities to grow its seismic data library through strategic data acquisitions and additional participation surveys.
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 11,800 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)
-------------------------------------------------------------------------
June 30, December 31,
2008 2007
-------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 11,287 $ 6,528
Accounts receivable 12,274 14,686
Other receivable 3,500 -
Prepaid expenses 347 425
Assets held for sale - 5,426
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27,408 27,065
Seismic data library 79,865 91,060
Participation surveys in progress 823 -
Assets held for sale - 5,629
Property and equipment 1,026 663
Other 56 56
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$ 109,178 $ 124,473
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 3,139 $ 2,178
Deferred revenue 3,944 2,897
Current portion of long-term debt 8,004 8,004
Liabilities held for sale - 1,727
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15,087 14,806
Long-term debt 19,305 23,543
Future income taxes 3,410 6,950
Shareholders' equity:
Share capital 72,422 72,463
Contributed surplus 1,471 1,508
Retained earnings (deficit) (2,517) 5,203
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71,376 79,174
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$ 109,178 $ 124,473
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PULSE DATA INC.
Interim Consolidated Statements of Earnings (Loss) and Comprehensive
Income (Loss) and Retained Earnings (Deficit)
(In thousands of dollars, except per share data) (unaudited)
-------------------------------------------------------------------------
Three months Six months
ended June 30 ended June 30
----------------------- -----------------------
2008 2007 2008 2007
-------------------------------------------------------------------------
Revenue $ 10,895 $ 10,527 $ 18,724 $ 21,150
Expenses:
Amortization of seismic
data library 6,582 6,288 13,228 12,576
Operating 904 907 1,707 1,709
Depreciation and
amortization 75 78 136 149
General and
administrative expenses 1,328 1,590 2,634 2,989
Corporate transaction costs - 605 - 700
Interest:
Long-term debt 459 682 1,008 1,424
Other (57) (87) (169) (165)
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402 595 839 1,259
-------------------------------------------------------------------------
Earnings from continuing
operations before income
taxes 1,604 464 180 1,768
Income taxes:
Current 28 608 28 677
Future (reduction) 546 (480) 131 (82)
-------------------------------------------------------------------------
574 128 159 595
Net earnings from
continuing operations $ 1,030 $ 336 $ 21 $ 1,173
Earnings (loss) from
discontinued operations,
net of income taxes 138 (386) (294) (1,693)
-------------------------------------------------------------------------
Net earnings (loss) and
comprehensive income
(loss) $ 1,168 $ (50) $ (273) $ (520)
Retained earnings,
beginning of period 816 17,219 5,203 19,165
Change in accounting
policy - - - 322
Normal course issuer
bid (1,824) - (2,048) -
Dividends declared (2,677) (1,801) (5,399) (3,599)
-------------------------------------------------------------------------
Retained earnings
(deficit), end of period $ (2,517) $ 15,368 $ (2,517) $ 15,368
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Earnings per share from
continuing operations,
basic and diluted $ 0.02 $ 0.01 $ 0.00 $ 0.02
Earnings (loss) per
share, basic and diluted $ 0.02 $ 0.00 $ (0.01) $ (0.01)
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PULSE DATA INC.
Interim Consolidated Statements of Cash Flows
(In thousands of dollars) (unaudited)
-------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
----------------------- -----------------------
2008 2007 2008 2007
-------------------------------------------------------------------------
Cash provided by
(used in):
Continuing operations:
Net earnings $ 1,030 $ 336 $ 21 $ 1,173
Items not involving
cash:
Amortization of
seismic data library 6,582 6,288 13,228 12,576
Depreciation and
amortization 75 78 136 149
Unrealized loss on
foreign exchange - 37 - -
(Gain) loss on assets
held for trading - (42) - 6
Future income taxes
(reduction) 546 (480) 131 (82)
Stock-based
compensation 150 226 290 434
Other 34 38 67 75
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8,417 6,481 13,873 14,331
Net change in non-cash
working capital 3,257 (927) 3,163 3,308
-------------------------------------------------------------------------
Cash provided by
continuing operations 11,674 5,554 17,036 17,639
Discontinued operations:
Funds from discontinued
operations (314) (534) (830) (2,221)
Additions to property
and equipment - (141) - (2,526)
Proceeds from sale of
Terrapoint 6,903 - 6,903 -
Net change in non-cash
working capital (3,596) (711) (3,271) 362
-------------------------------------------------------------------------
Cash provided by (used in)
discontinued operations 2,993 (1,386) 2,802 (4,385)
-------------------------------------------------------------------------
Financing:
Repayment of long-term
debt (2,001) (2,001) (4,002) (4,002)
Financing charges (302) 3 (302) 3
Issue of share capital 1,079 108 1,305 129
Dividends paid (5,110) (3,377) (5,110) (3,377)
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(6,334) (5,267) (8,109) (7,247)
Investing:
Normal course issuer bid (3,549) (89) (4,011) (89)
Seismic data purchases (2,033) - (2,033) -
Participation surveys in
progress (823) - (823) -
Additions to property
and equipment (149) (115) (499) (189)
Cash sales of
investments - 729 - 729
Net change in non-cash
working capital items
related to investing 544 - 396 -
-------------------------------------------------------------------------
(6,010) 525 (6,970) 451
-------------------------------------------------------------------------
Increase (decrease) in
cash position 2,323 (574) 4,759 6,458
Cash and cash equivalents,
beginning of period 8,964 9,213 6,528 2,181
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Cash and cash equivalents,
end of period $ 11,287 $ 8,639 $ 11,287 $ 8,639
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