Pulse Seismic Inc. Reports Q1 2021 Results

Rhea-AI Summary

Pulse Seismic reports significant financial improvements for Q1 2021, with total revenue of $4.8 million, up from $2.3 million in Q1 2020. The company achieved net earnings of $33,000 versus a net loss of $2.8 million during the same period last year. Cash EBITDA rose to $3.6 million from $1.1 million, and shareholder free cash flow increased to $2.6 million. The company has reduced long-term debt by $8.8 million, bringing total long-term debt to $19.0 million. Despite a cautious outlook amid industry uncertainty, Pulse continues to focus on cash preservation and cost reduction.

Positive

• Total revenue increased by 109% year-over-year to $4.8 million.
• Net earnings improved to $33,000 compared to a net loss of $2.8 million in Q1 2020.
• Cash EBITDA rose to $3.6 million, an increase from $1.1 million in the previous year.
• Shareholder free cash flow reached $2.6 million, up from $752,000 in Q1 2020.
• The company repaid $8.8 million of senior long-term debt, reducing total long-term debt to $19 million.

Negative

• Working capital decreased to -$401,000 from $1,040,000 year-over-year.
• Long-term debt remains significant at $19.0 million, despite reductions.

CALGARY, Alberta, April 21, 2021 (GLOBE NEWSWIRE) -- Pulse Seismic Inc. (TSX:PSD) (OTCQX:PLSDF) (“Pulse” or “the Company”) is pleased to report its financial and operating results for the three months ended March 31, 2021. The unaudited condensed consolidated interim financial statements, accompanying notes and MD&A are being filed on SEDAR (www.sedar.com) and will be available on Pulse’s website at www.pulseseismic.com.

HIGHLIGHTS FOR THE THREE MONTHS ENDED MARCH 31, 2021

• Total revenue was $4.8 million compared to $2.3 million for the three months ended March 31, 2020;
   
• Net earnings were $33,000 ($0.00 per share basic and diluted) compared to a net loss of $2.8 million ($0.05 per share basic and diluted) in the first quarter of 2020;
   
• Cash EBITDA was $3.6 million ($0.07 per share basic and diluted) compared to $1.1 million ($0.02 per share basic and diluted) in the first quarter of 2020;
   
• Shareholder free cash flow was $2.6 million ($0.05 per share basic and diluted) compared to $752,000 ($0.01 per share basic and diluted) in the first quarter of 2020;
   
• During Q1 2021 the Company repaid a total of $8.8 million of senior long-term debt. At March 31, 2021, long-term debt (net of deferred financing cost) was $19.0 million and the Company had $16.0 million available on its revolving credit facility; and
   
• Revenue update for Q2 2021 – Year to date revenue is $8.6 million, including $3.8 million closed this month.

CORPORATE UPDATE AND COVID-19 UPDATE

Pulse remains committed to the health and safety of its employees. Since March 13, 2020 many Pulse employees have been continuously working remotely. In addition, the Company has a small group working at its warehouse facility. The guidance of health authorities continues to be closely monitored and Pulse has a minimum number of staff working in the office from time to time, as is deemed necessary. Pulse’s business is supplying licences to a digitally-based product, seismic data and, as a result, the combination of staff working in the office and remotely allows for timely responses to customers’ needs. The Company’s top priorities continue to be the safety of its employees, preserving cash and protecting the balance sheet while weathering these uncertain times.

SELECTED FINANCIAL AND OPERATING INFORMATION
(thousands of dollars except per share data,		Three months ended March 31,				Year ended
numbers of shares and kilometres of seismic data)	2021			2020		December 31,
		(unaudited)				2020
Revenue
Data library sales		4,740		2,190		11,011
Other revenue		85		90		338
Total revenue		4,825		2,280		11,349
Amortization of seismic data library		2,498		3,516		11,348
Net earnings (loss)		33		(2,827)		(6,786)
Per share basic and diluted		0.00		(0.05)		(0.13)
Cash provided by operating activities		9,082		2,322		3,814
Per share basic and diluted		0.17		0.04		0.07
Cash EBITDA (a)		3,649		1,081		7,553
Per share basic and diluted (a)		0.07		0.02		0.14
Shareholder free cash flow (a)		2,569		752		5,346
Per share basic and diluted (a)		0.05		0.01		0.10
Capital expenditures
Seismic data purchases, digitization and related costs		96		96		383
Property and equipment		-		-		7
Total capital expenditures		96		96		390
Weighted average shares outstanding
Basic and diluted		53,793,317		53,793,317		53,793,317
Shares outstanding at period-end		53,793,317		53,793,317		53,793,317
Seismic library
2D in kilometres		829,207		829,207		829,207
3D in square kilometres		65,310		65,310		65,310
FINANCIAL POSITION AND RATIOS
		March 31,		March 31,		December 31,
(thousands of dollars except ratios)		2021		2020		2020
Working capital		(401)		1,040		5,601
Working capital ratio		0.8:1		1.2:1		3.6:1
Cash and cash equivalents		-		1,036		-
Total assets		48,077		63,838		56,742
Long-term debt		18,976		29,169		27,715
Trailing 12-month (TTM) cash EBITDA (b)		10,121		15,605		7,553
Shareholders’ equity		25,356		29,134		25,266
Long-term debt to TTM cash EBITDA ratio		1.87		1.87		3.67
Long-term debt to equity ratio		0.75		1.00		1.10

^(a) The Company’s continuous disclosure documents provide discussion and analysis of “cash EBITDA”, “cash EBITDA per share”, “shareholder free cash flow” and “shareholder free cash flow per share”. These financial measures do not have standard definitions prescribed by IFRS 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, repayment of debt, purchase of its shares, discretionary capital expenditures and the payment of dividends, and is calculated as earnings (loss) from operations before interest, taxes, depreciation and amortization less participation survey revenue, plus any non-cash and non-recurring expenses. Cash EBITDA excludes participation survey revenue as these funds are directly used to fund specific participation surveys and this revenue is not available for discretionary capital expenditures. The Company believes cash EBITDA assists investors in comparing Pulse’s results on a consistent basis without regard to participation survey revenue and non-cash items, such as depreciation and amortization, which can vary significantly depending on accounting methods or non-operating factors such as historical cost. Cash EBITDA per share is defined as cash EBITDA divided by the weighted average number of shares outstanding for the period. Shareholder free cash flow further refines the calculation of capital available to invest in growing the Company’s 2D and 3D seismic data library, to repay debt, to purchase its common shares and to pay dividends by deducting non-discretionary expenditures from cash EBITDA. Non-discretionary expenditures are defined as debt financing costs (net of deferred financing expenses amortized in the current period) and current tax provisions. Shareholder free cash flow per share is defined as shareholder free cash flow divided by the weighted average number of shares outstanding for the period.

These non-GAAP financial measures are defined, calculated and reconciled to the nearest GAAP financial measures in the Management's Discussion and Analysis.

OUTLOOK

With economic, industry and pandemic-related uncertainty all remaining unusually high, Pulse is unable to issue a specific outlook concerning industry and market conditions over the next several quarters. Commodity prices strengthened somewhat over the winter, the outlook for industry capital expenditures and field activities has improved modestly, and the pace and value of industry M&A activity have picked up over 2020. Revenues from mineral lease auctions (“land sales”) in B.C. and Alberta in the first three months of 2021 remained at or near record lows. When combined with the Company’s data library sales results to date in 2021, Pulse’s overall assessment is that the outlook for traditional sales for the balance of the year remains unclear, while transaction-based sales of any size could occur at any time.

Having spent the past six years reducing controllable costs, maximizing efficiencies, maintaining a strong balance sheet, and optimizing its access to credit, all while significantly increasing the size of its data library asset, Pulse remains well-prepared for a range of industry conditions in 2021 and beyond. As it has repeatedly demonstrated, the Company can generate positive shareholder free cash flow at or even below its current level of quarterly sales. Pulse will continue to seek further cost reductions where possible, without impairing the Company’s ability to serve its clients, conduct sales and act on attractive opportunities. The seismic library’s data does not deteriorate or expire and incurs minimal maintenance costs.

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 largest licensable seismic data library in Canada, currently consisting of approximately 65,310 square kilometres of 3D seismic and 829,207 kilometres of 2D seismic. The library extensively covers the Western Canada Sedimentary Basin, where most of Canada’s oil and natural gas exploration and development occur.

For further information, please contact:
Neal Coleman, President and CEO
Or
Pamela Wicks, Vice President Finance and CFO
Tel.: 403-237-5559
Toll-free: 1-877-460-5559
E-mail: info@pulseseismic.com.
Please visit our website at www.pulseseismic.com

This document contains information that constitutes “forward-looking information” or “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities legislation. Forward-looking information is often, but not always, identified by the use of words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “forecast”, “target”, “project”, “guidance”, “may”, “will”, “should”, “could”, “estimate”, “predict” or similar words suggesting future outcomes or language suggesting an outlook.

The Outlook section herein contain forward-looking information which includes, but is not limited to, statements regarding:

>  The outlook of the Company for the year ahead, including future operating costs and expected revenues;

>  The Company’s capital resources and sufficiency thereof to finance future operations, meet its obligations associated with financial liabilities and carry out the necessary capital expenditures through 2021;

>  Pulse’s capital allocation strategy;

>  Oil and natural gas prices and forecast trends;

>  Oil and natural gas drilling activity and land sales activity;

>  Oil and natural gas company capital budgets;

>  Future demand for seismic data;

>  Future seismic data sales;

>  Pulse’s business and growth strategy; and

>  Other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results and performance, as they relate to the Company or to the oil and natural gas industry as a whole.

By its very nature, forward-looking information involves inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. Pulse does not publish specific financial goals or otherwise provide guidance, due to the inherently poor visibility of seismic revenue. The Company cautions readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking information. These factors include, but are not limited to:

>  Uncertainty of the timing and volume of data sales from the recently acquired seismic data library, which was partially funded with long-term debt;

>  Volatility of oil and natural gas prices;

>  Risks associated with the oil and natural gas industry in general;

>  The Company’s ability to access external sources of debt and equity capital;

>  Credit, liquidity and commodity price risks;

>  The demand for seismic data and;

>  The pricing of data library licence sales;

>  Cybersecurity;

>  Relicensing (change-of-control) fees and partner copy sales;

>  Environmental, health and safety risks, including those related to the COVID-19 pandemic;

>  Federal and provincial government laws and regulations, including those pertaining to taxation, royalty rates, environmental protection, public health and safety;

>  Competition;

>  Dependence on key management, operations and marketing personnel;

>  The loss of seismic data;

>  Protection of intellectual property rights;

>  The introduction of new products; and

>  Climate change.

Pulse cautions that the foregoing list of factors that may affect future results is not exhaustive. Additional information on these risks and other factors which could affect the Company’s operations and financial results is included under “Risk Factors” in the Company’s most recent annual information form, and in the Company’s most recent audited annual financial statements, most recent MD&A, management information circular, quarterly reports, material change reports and news releases. Copies of the Company’s public filings are available on SEDAR at www.sedar.com.

When relying on forward-looking information to make decisions with respect to Pulse, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Furthermore, the forward-looking information contained in this document is provided as of the date of this document and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking information, except as required by law. The forward-looking information in this document is provided for the limited purpose of enabling current and potential investors to evaluate an investment in Pulse. Readers are cautioned that such forward-looking information may not be appropriate, and should not be used, for other purposes.

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FAQ

What were Pulse Seismic's Q1 2021 revenue figures?

Pulse Seismic reported total revenue of $4.8 million for Q1 2021, significantly up from $2.3 million in Q1 2020.

How did Pulse Seismic's net earnings change in Q1 2021?

In Q1 2021, Pulse Seismic achieved net earnings of $33,000, a substantial improvement from a net loss of $2.8 million in the same quarter of 2020.

What is Pulse Seismic's long-term debt as of March 31, 2021?

As of March 31, 2021, Pulse Seismic's long-term debt totaled $19 million, down from $29.2 million in the previous year.

What is the shareholder free cash flow reported by Pulse Seismic for Q1 2021?

Pulse Seismic reported shareholder free cash flow of $2.6 million for Q1 2021, compared to $752,000 in Q1 2020.

What challenges does Pulse Seismic face in the upcoming quarters?

Pulse Seismic's outlook is cautious due to ongoing economic and industry uncertainties, particularly regarding commodity prices and traditional sales.