HOUSTON--(BUSINESS WIRE)--Seitel, Inc., a leading provider of seismic data to the oil and gas industry, today reported results for the fourth quarter and year ended December 31, 2012.
Fourth Quarter and Full Year Highlights -
| (in millions) | Fourth Quarter | Full Year | ||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||
| Cash Resales | $ | 58.4 | $ | 42.4 | $ | 136.2 | $ | 134.5 | ||||||||||||||||||
| Total Revenue | 70.3 | 70.8 | 240.5 | 218.0 | ||||||||||||||||||||||
| Cash EBITDA | 51.6 | 35.0 | 115.3 | 112.0 | ||||||||||||||||||||||
Total revenue for the fourth quarter of 2012 was $70.3 million, consisting of acquisition underwriting revenue of $28.7 million, total resale licensing revenue of $40.6 million and Solutions and other revenue of $1.1 million. This compares to total revenue for the fourth quarter of 2011 of $70.8 million, consisting of acquisition underwriting revenue of $27.7 million, total resale licensing revenue of $42.0 million and Solutions and other revenue of $1.1 million. Cash resales in the fourth quarter of 2012 were $58.4 million, an increase of 38%, compared to $42.4 million in the fourth quarter of 2011.
Total revenue for the year ended December 31, 2012 was $240.5 million, an increase of $22.5 million, or 10%, from the 2011 level of $218.0 million. Activity for new data acquisition continues to be strong with acquisition underwriting revenue for 2012 totaling $107.3 million, an increase of $29.8 million as compared to 2011. We continue to add data in the key active unconventional plays in North America focused on oil and liquids-rich hydrocarbons including Eagle Ford, Utica/Marcellus, Niobrara, Granite Wash (Panhandle Plays), Montney and Cardium. Total resale licensing revenue was $127.5 million in 2012 compared to $136.3 million in 2011. For the year ended December 31, 2012, cash resales were $136.2 million compared to cash resales of $134.5 million last year. In 2012, cash resales were distributed across most basins in which we have seismic data, including unconventional and conventional areas, with a focus on oil and liquids-rich areas. Solutions and other revenue was $5.7 million for 2012 compared to $4.4 million in 2011.
For the fourth quarter of 2012, our net income was $19.9 million compared to the 2011 fourth quarter net income of $11.8 million. Lower amortization on our seismic data library was the primary reason for the improvement in net income between quarters. For the year ended December 31, 2012, our net income was $37.1 million compared to $2.2 million in 2011. The increase in revenue and lower interest expense were the primary drivers for the improved results year over year, along with 2011 including a $7.9 million charge for early extinguishment of debt.
Cash EBITDA, generally defined as cash resales and Solutions revenue less cash operating expenses (excluding various non-recurring items), was $51.6 million for the fourth quarter of 2012 compared to $35.0 million for the fourth quarter of 2011. Cash EBITDA was $115.3 million for the year ended December 31, 2012 compared to $112.0 million in 2011.
"We ended the year on a strong note, generating $58.4 million in cash resales in the fourth quarter, the highest in the company's history," commented Rob Monson, president and chief executive officer. "Our newer data as well as older data continue to generate cash resales. We grew our data library by 2,800 square miles in 2012, focusing on data in oil and liquids-rich areas of the key unconventional plays in North America. We now have 17,450 square miles of unconventional data in our library, with 2.400 square miles in progress. The significant investments made in 2011 and 2012 are expected to drive growth in the future."
Selling, general and administrative (“SG&A”) expenses were $8.4 million for the fourth quarter of 2012 compared to $8.5 million in the fourth quarter of last year. SG&A expenses were $29.1 million for the year ended December 31, 2012 compared to $31.6 million in the same period last year. SG&A expenses decreased between the periods primarily due to a decrease in variable compensation.
We made a strategic decision to increase our capital investments in 2012 to take advantage of the strong opportunities to increase the size of our data library. Gross capital expenditures for 2012 were $192.6 million, of which $176.1 million related to new data acquisition. Total acquisition underwriting revenue for the year was $107.3 million. Our net cash capital expenditures totaled $87.5 million for 2012.
We have reduced our expected level of net cash capital expenditures for 2013 given the strong level of investment made in the last two years in order to generate additional free cash flow. Currently, we are forecasting our net cash capital expenditures for 2013 to be approximately $60.0 million. Our current backlog of net cash capital expenditures related to acquisition programs is $36.8 million, of which we expect the majority to be incurred in 2013.
ABOUT SEITEL
Seitel is a leading provider of onshore seismic data to the oil and gas industry in North America. Seitel's data products and services are critical for the exploration for and development of oil and gas reserves by oil and gas companies. Seitel has ownership in an extensive library of proprietary onshore and offshore seismic data that it has accumulated since 1982 and that it licenses to a wide range of oil and gas companies. Seitel believes that its library of 3D onshore seismic data is the largest available for licensing in North America and includes leading positions in oil and liquids-rich unconventional plays. Seitel has ownership in over 37,000 square miles of 3D onshore data, over 10,000 square miles of 3D offshore data and approximately 1.1 million linear miles of 2D seismic data concentrated in the major active North American oil and gas producing regions. Seitel serves a market which includes over 1,600 companies in the oil and gas industry.
The press release contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” or “anticipates” or similar expressions that concern the strategy, plans or intentions of the Company. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, actual results may differ materially from management expectations reflected in our forward-looking statements. These risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, a copy of which may be obtained from the Company without charge. Management undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
The press release also includes certain non-GAAP financial measures as defined under the SEC rules. Non-GAAP financial measures include cash resales, for which the most comparable GAAP measure is total revenue; cash EBITDA, for which the most comparable GAAP measure is income from operations; net cash capital expenditures, for which the most comparable GAAP measure is total capital expenditures; and cash operating expenses for which the most comparable GAAP measure is total operating expenses.
(Tables to follow)
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SEITEL, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands, except share and per share amounts) |
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| December 31, | December 31, | ||||||||||||
| 2012 | 2011 | ||||||||||||
| ASSETS | |||||||||||||
| Cash and cash equivalents | $ | 61,891 | $ | 74,894 | |||||||||
| Receivables, net | 64,212 | 56,489 | |||||||||||
| Net seismic data library | 180,117 | 120,694 | |||||||||||
| Net property and equipment | 4,818 | 5,039 | |||||||||||
| Investment in marketable securities |
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262 | |||||||||||
| Prepaid expenses, deferred charges and other | 10,774 | 10,244 | |||||||||||
| Intangible assets, net | 20,828 | 26,814 | |||||||||||
| Goodwill | 208,020 | 205,838 | |||||||||||
| Deferred income taxes | 84 | 56 | |||||||||||
| TOTAL ASSETS | $ | 550,744 | $ | 500,330 | |||||||||
| LIABILITIES AND STOCKHOLDER'S EQUITY | |||||||||||||
| Accounts payable | $ | 37,521 | $ | 36,593 | |||||||||
| Accrued liabilities | 19,569 | 16,856 | |||||||||||
| Employee compensation payable | 5,693 | 7,101 | |||||||||||
| Income taxes payable | 4,134 | 1,464 | |||||||||||
| Debt: | |||||||||||||
| Senior Notes | 275,000 | 275,000 | |||||||||||
| Notes payable | 29 | 95 | |||||||||||
| Obligations under capital leases | 3,113 | 3,161 | |||||||||||
| Deferred revenue | 52,857 | 48,845 | |||||||||||
| Deferred income taxes | 2,470 | 1,375 | |||||||||||
| TOTAL LIABILITIES | 400,386 | 390,490 | |||||||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||||||
| STOCKHOLDER'S EQUITY | |||||||||||||
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Common stock, par value $.001 per share; 100 shares authorized, issued and outstanding at December 31, 2012 and December 31, 2011 |
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| Additional paid-in capital | 398,772 | 398,011 | |||||||||||
| Retained deficit | (272,135 | ) | (309,185 | ) | |||||||||
| Accumulated other comprehensive income | 23,721 | 21,014 | |||||||||||
| TOTAL STOCKHOLDER'S EQUITY | 150,358 | 109,840 | |||||||||||
| TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | $ | 550,744 | $ | 500,330 | |||||||||
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SEITEL, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands) |
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| (Unaudited) | |||||||||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||||||
| REVENUE | $ | 70,327 | $ | 70,759 | $ | 240,458 | $ | 218,008 | |||||||||||||||||||
| EXPENSES: | |||||||||||||||||||||||||||
| Depreciation and amortization | 32,830 | 43,251 | 139,754 | 142,963 | |||||||||||||||||||||||
| Cost of sales | 112 | 32 | 464 | 100 | |||||||||||||||||||||||
| Selling, general and administrative | 8,446 | 8,522 | 29,088 | 31,649 | |||||||||||||||||||||||
| 41,388 | 51,805 | 169,306 | 174,712 | ||||||||||||||||||||||||
| INCOME FROM OPERATIONS | 28,939 | 18,954 | 71,152 | 43,296 | |||||||||||||||||||||||
| Interest expense, net | (7,273 | ) | (7,145 | ) | (29,011 | ) | (34,767 | ) | |||||||||||||||||||
| Foreign currency exchange gains (losses) | (355 | ) | 448 | 681 | (726 | ) | |||||||||||||||||||||
| Loss on early extinguishment of debt |
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(7,912 | ) | ||||||||||||||||||||||
| Gain on sale of marketable securities |
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230 | 2,467 | |||||||||||||||||||||||
| Other income | 70 | 42 | 780 | 250 | |||||||||||||||||||||||
| Income before income taxes | 21,381 | 12,299 | 43,832 | 2,608 | |||||||||||||||||||||||
| Provision for income taxes | 1,436 | 457 | 6,782 | 392 | |||||||||||||||||||||||
| NET INCOME | $ | 19,945 | $ | 11,842 | $ | 37,050 | $ | 2,216 | |||||||||||||||||||
Cash resales represent new contracts for data licenses from our library, including data currently in progress, payable in cash. We believe this measure is important in assessing overall industry and client activity. Cash resales are likely to fluctuate quarter to quarter as they do not require the longer planning and lead times necessary for new data creation. The following table summarizes the components of Seitel's revenue and shows how cash resales (a non-GAAP financial measure) are a component of total revenue, the most directly comparable GAAP financial measure (in thousands):
| Quarter Ended | Year Ended | ||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||||
| Total acquisition underwriting revenue | $ | 28,688 | $ | 27,705 | $ | 107,254 | $ | 77,406 | |||||||||||||||||
| Resale licensing revenue: | |||||||||||||||||||||||||
| Cash resales | 58,424 | 42,350 | 136,234 | 134,497 | |||||||||||||||||||||
| Non-monetary exchanges | 261 | 738 | 1,554 | 7,609 | |||||||||||||||||||||
| Revenue recognition adjustments | (18,116 | ) | (1,087 | ) | (10,257 | ) | (5,856 | ) | |||||||||||||||||
| Total resale licensing revenue | 40,569 | 42,001 | 127,531 | 136,250 | |||||||||||||||||||||
| Total seismic revenue | 69,257 | 69,706 | 234,785 | 213,656 | |||||||||||||||||||||
| Solutions and other | 1,070 | 1,053 | 5,673 | 4,352 | |||||||||||||||||||||
| Total revenue | $ | 70,327 | $ | 70,759 | $ | 240,458 | $ | 218,008 | |||||||||||||||||
Cash EBITDA represents cash generated from licensing data from our seismic library net of recurring cash operating expenses. We believe this measure is helpful in determining the level of cash from operations we have available for debt service and funding of capital expenditures (net of the portion funded or underwritten by our customers). Cash EBITDA includes cash resales plus all other cash revenues other than from data acquisitions, plus gains on sales of marketable securities and cash distributions from investments obtained as part of licensing our seismic data, less cost of goods sold and cash selling, general and administrative expenses (excluding non-recurring corporate expenses such as severance and legal, financial and other expenses related to corporate and strategic transactions). The following is a quantitative reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, operating income (in thousands):
| Quarter Ended | Year Ended | |||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||
| Cash EBITDA | $ | 51,591 | $ | 34,971 | $ | 115,347 | $ | 112,031 | ||||||||||||||||||
| Add (subtract) other revenue components not included in cash EBITDA: | ||||||||||||||||||||||||||
| Acquisition underwriting revenue | 28,688 | 27,705 | 107,254 | 77,406 | ||||||||||||||||||||||
| Non-monetary exchanges | 261 | 738 | 1,554 | 7,609 | ||||||||||||||||||||||
| Revenue recognition adjustments | (18,116 | ) | (1,087 | ) | (10,257 | ) | (5,856 | ) | ||||||||||||||||||
| Solutions non-cash revenue |
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2 | 20 | 71 | ||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Gain on sale of marketable securities |
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(230 | ) | (2,467 | ) | ||||||||||||||||||||
| Cash distributions from investments |
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(400 | ) |
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| Depreciation and amortization | (32,830 | ) | (43,251 | ) | (139,754 | ) | (142,963 | ) | ||||||||||||||||||
| Non-recurring corporate expenses | (234 | ) |
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(1,228 | ) | (1,792 | ) | |||||||||||||||||||
| Non-cash operating expenses | (421 | ) | (124 | ) | (1,154 | ) | (743 | ) | ||||||||||||||||||
| Operating income | $ | 28,939 | $ | 18,954 | $ | 71,152 | $ | 43,296 | ||||||||||||||||||
The following table summarizes the cash and non-cash components of our total operating expenses (cost of sales and selling, general and administrative (“SG&A”) expenses) for the periods indicated (in thousands):
| Quarter Ended | Year Ended | ||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||||
| Cost of Sales | $ | 112 | $ | 32 | $ | 464 | $ | 100 | |||||||||||||||||
| Cash SG&A expenses (1) | 8,025 | 8,398 | 27,934 | 30,906 | |||||||||||||||||||||
| Cash operating expenses | 8,137 | 8,430 | 28,398 | 31,006 | |||||||||||||||||||||
| Non-cash equity compensation expense | 242 | 53 | 761 | 453 | |||||||||||||||||||||
| Non-cash rent expense | 179 | 71 | 393 | 290 | |||||||||||||||||||||
| Total | $ | 8,558 | $ | 8,554 | $ | 29,552 | $ | 31,749 | |||||||||||||||||
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(1) |
Includes $0.2 million, $1.2 million and $1.8 million of non-recurring corporate expenses for the quarter ended December 31, 2012, the year ended December 31, 2012 and the year ended December 31, 2011, respectively. | |||
The following table summarizes our actual capital expenditures for 2012 and our 2013 estimated capital expenditures (in thousands):
| Estimate for | ||||||||||||||
| Year Ended | Year Ending | |||||||||||||
| Dec. 31, 2012 | Dec. 31, 2013 | |||||||||||||
| New data acquisition | $ | 176,062 | $ | 181,500 | ||||||||||
| Cash purchases and data processing | 11,678 | 5,600 | ||||||||||||
| Non-monetary exchanges | 3,376 | 7,400 | ||||||||||||
| Property and equipment and other | 1,517 | 1,900 | ||||||||||||
| Total capital expenditures | 192,633 | 196,400 | ||||||||||||
| Less: | ||||||||||||||
| Non-monetary exchanges | (3,376 | ) | (7,400 | ) | ||||||||||
| Cash underwriting | (101,803 | ) | (129,000 | ) | ||||||||||
| Net cash capital expenditures | $ | 87,454 | $ | 60,000 | ||||||||||