Pulse Seismic Inc. Reports Q1 2020 Results

CALGARY, Alberta, June 05, 2020 (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, 2020. The audited consolidated 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, 2020Data library sales were $2.2 million for the three months ended March 31, 2020 compared to $5.3 million for the three months ended March 31, 2019;The net loss was $2.8 million or $0.05 per share compared to a net loss of $2.7 million or $0.05 per share in the first quarter of 2019;Cash EBITDA was $1.1 million or $0.02 per share compared to $3.1 million or $0.06 per share for the comparable period in 2019;Shareholder free cash flow was $763,000 or $0.01 per share compared to $2.7 million or $0.05 per share in the first quarter of 2019; andAt March 31, 2020 long-term debt excluding deferred financing charges was $29.4 million.CORPORATE AND COVID-19 UPDATEAt March 31, 2020 the Company was in compliance with all covenants related to its syndicated credit facility. In January 2019 Pulse borrowed a total of $38 million to partially fund the acquisition of Seitel Canada Ltd. (Seitel). This indebtedness included approximately $23.0 million in senior debt from its syndicated credit facility, $10.0 million in subordinated debt and an additional $5.0 million due to the vendor of Seitel which reflected a potential sales-based deferred payment to the vendor. This acquisition more than doubled the size of Pulse’s seismic data library, which we believe has doubled the opportunity set for future sales. At March 31, 2020 the balance owing on these credit facilities was $29.4 million, of which $19.4 million was due on its senior credit facility and $10.0 million in subordinated debt. The sales-based deferred payment was fully satisfied by mid 2019.
With ongoing uncertainty as to the length and continued severity of this oil and gas downturn, Pulse negotiated with the lead bank of its syndicated credit facility to amend its financial covenants to ensure additional flexibility in future quarters. The details are disclosed in the financial statements as well as in the liquidity, capital resources and capital requirements section of the MD&A, for the three months ended March 31, 2020.
Management and the Board of Directors of the Company have taken cost-cutting measures in reaction to the decline in commodity prices and uncertainty surrounding the continuation of the low oil price environment. Pulse has implemented salary reductions ranging from 10 percent to 20 percent for its executive and management team, and compensation for the Board of Directors has also been reduced. Director fees for the chair of the Board of Directors has been reduced by 50% and all other independent director’s fees have been reduced by 40%.  All administrative and operating expenses and capital spending plans have been evaluated and reduced where appropriate.
Pulse continues to respond to very challenging business conditions brought about by the combined impact of the COVID-19 pandemic and the precipitous decline of oil prices brought on by the unprecedented demand fallout from COVID-19. These global events have caused significant declines in the 2020 capital budgets of Pulse’s customers in the oil and natural gas sector of Western Canada. While the Company continues to see a lack of clarity into future seismic data licensing opportunities, Pulse remains engaged with customers to monitor their seismic data requirements.
Pulse also remains committed to the health and safety of its employees. In response to the public health measures associated with the pandemic, Pulse implemented its disaster recovery plan and staff have been working remotely since March 13, 2020. Management is closely monitoring the guidance of the health authorities and it is anticipated that staff will continue to work remotely for the foreseeable future.  Pulse’s business is supplying licences to a digitally-based product, seismic data, and as a result, staff are able to respond to customer needs in a timely manner. The Company’s primary focus and attention at this time continues to be the safety of its employees, preserving cash and protecting the balance sheet while weathering these uncertain and unprecedented times.
Q2 2020 SALES UPDATE
The Company is pleased to announce that as of June 5, 2020 seismic data sales total $1.75 million for the second quarter. This brings year to date seismic data library sales revenue to approximately $4.0 million.
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, lease payments treated as capital lease and warehouse storage fees, 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.TTM cash EBITDA is defined as the sum of the trailing 12 months’ cash EBITDA and is used to provide a comparable annualized measure.These non-GAAP financial measures are defined, calculated and reconciled to the nearest GAAP financial measures in the Management’s Discussion and Analysis.OUTLOOK