Joe Sixer
Well, here it is. Any opinions on how bad it will be tomorrow?
Frankly, I was glad they were still showing a profit in this environment, just didn't like the "nil" part for the rest of the year:
biz.yahoo.com
Tuesday March 2, 6:02 pm Eastern Time
Company Press Release
Veritas DGC Inc. Announces Second Quarter Earnings
HOUSTON--(BUSINESS WIRE)--March 2, 1999--Veritas DGC Inc. (the ''Company'')(TSE:VTS - news; NYSE:VTS -
news) Tuesday announced earnings for its fiscal 1999 second quarter and six months ended January 31, 1999 as presented
below, with the comparative amounts for the fiscal 1998 corresponding periods.
Three Months Ended Six Months Ended
January 31, January 31,
1999 1998 1999 1998
($ millions, except per share amounts)
Revenues $101.7 $123.6 $248.5 $265.8
Net income 5.4 17.7 19.1 39.0
Earnings per
common share .24 .79 .84 1.74
Earnings per
common share --
assuming dilution .24 .76 .83 1.68
''Considering the significant deterioration in industry activity levels, we are pleased with the results of our fiscal 1999 second quarter with earnings per share of
$0.24,'' said Dave Robson, chairman and chief executive officer. Robson went on to say, ''The reduction in second quarter earnings from the prior year relates to
reduced demand that has created a much more competitive market that started in our land business and is now becoming evident in each of our business units. In
spite of a difficult earnings environment, we are pleased with the strong cash flow (profit after taxes plus depreciation and amortization) of $23.2 million generated
during the quarter.''
Revenues by service group for the fiscal years' 1999 and 1998 second quarters and six months ended are:
Three Months Ended Six Months Ended
January 31, January 31,
1999 1998 1999 1998
($ millions)
Land and transition
zone acquisition $46.0 $51.4 $121.3 $110.7
Marine acquisition 20.4 25.2 45.4 43.5
Data processing 21.0 22.8 45.4 45.1
Data library 14.3 24.2 36.4 66.5
$101.7 $123.6 $248.5 $265.8
Operating margins (revenues less cost of services) as a percent of revenues decreased during the second quarter to 31 percent from 35 percent in the previous
year's second quarter.
At Jan. 31, 1999, the Company's combined operating backlog stood at $149 million compared to $227 million for the fiscal 1999 first quarter.
Land & Transition Zone Acquisition
Revenues from land and transition zone data acquisition decreased 11 percent from the prior year's second quarter. All land acquisition markets with the exception
of the Middle East showed reduced levels of activity. At the end of the second quarter, the Company was operating a total of 11 crews: five in Canada, one in the
U.S. highlands, two in the U.S. transition zone, two in the Middle East and one in Argentina. This compares to 21 crews operating in the comparable quarter last
year.
Operating margins for land and transition zone acquisition decreased to 9 percent from 16 percent in the comparable fiscal year 1998 second quarter. Backlog for
the business segment is $50.7 million compared to $85.0 million at the end of the fiscal year 1999 first quarter.
Marine Acquisition
Marine acquisition revenues decreased 19 percent over last year's second quarter due mainly to the mobilization of vessels to different markets, as well as lower
funding levels on multi-client data library projects. Operating margins for marine acquisition increased to 54 percent from 49 percent in the comparable quarter,
primarily as a result of the improved efficiency of the Veritas Viking and overall productivity.
During the quarter, the Veritas Viking joined the Polar Search, the Polar Princess and the multi-boat operation to record multi-client 3D projects in the deep water
Gulf of Mexico. The Acadian Searcher and the Ross Seal operated on proprietary 2D projects in the Asia Pacific market and a multi-client program offshore
Australia. The Professor Kurentsov completed a 2D data library program offshore Nigeria. The Company has been awarded work offshore Brazil, the timing of
which remains uncertain pending the resolution of terms for the development of these projects.
Backlog for the business segment is $57.0 million compared with $93.0 million at the end of the first quarter.
Data Processing
Data processing revenues decreased by 8 percent over the prior year's quarter. Operating margins for processing were 34 percent compared with 33 percent in the
prior year's comparable quarter. The industry continues to show strong demand for processing large volumes of 3D data through computer-intensive processes such
as pre-stack time and depth migration.
Backlog for the business segment was $41.3 million compared with $50.0 million at the end of the first quarter.
Data Library
Data library sales decreased by 41 percent compared with the prior year's quarter. Reduced demand resulted in lower levels of sales in all data library markets;
however, operating margins for data library surveys sold were 65 percent compared with 61 percent in the comparable quarter last year.
Although market conditions have resulted in a decline in data library sales, the Company has accumulated an ever increasing data base of valuable survey
information. Management believes this investment will continue to contribute to long-term earnings for the Company. The inventory of data library stood at 2.2 million
line kilometers at the end of the fiscal 1999 second quarter. Over 70 percent of this is 3D data that has been acquired within the last two years of operation. The
book value of this data base was $94.8 million.
Future Outlook
At the end of the first fiscal quarter of 1999, management cautioned that the street consensus earnings estimate for fiscal 1999 was too high. Since the end of the first
quarter, many oil and gas companies have announced annual budgets that are substantially lower than previously anticipated. Key factors affecting future results will
include utilization levels for both land and marine crews and the level of data library sales. The ability to forecast future earnings is made more difficult as a result of
continuing reduction in activity. Given the current industry outlook, management believes earnings for the remainder of the fiscal year are likely to be nominal.
Management has undertaken certain initiatives in response to the current industry downturn to preserve the financial strength and flexibility of the Company. Since
September 1998, headcount has been decreased from approximately 4,500 to 2,500 employees. The Company has begun decommissioning the multi-boat
operation in the Gulf of Mexico. These three vessels are on short-term charters and will be returned to their owners. In order to further reduce capital expenditures,
the seismic equipment outfitting these vessels will be installed on the second Viking class 3D vessel, which is scheduled for delivery in May 1999. Management
continues to monitor discretionary capital expenditures.
The Company's current financial strength and leadership position has allowed it to capitalize on strategic opportunities that management believes will add long-term
value. As previously announced, the Company has acquired Time Seismic Exchange Ltd., a firm engaged in the Canadian land data library business. The Company
has also announced the signing of a letter of intent to acquire Enertec Resource Services, Inc., a quality provider of seismic data acquisition, data processing and
marine hazard surveys in North America in a stock-for-stock transaction valued at approximately $24.0 million. The Company also completed a visualization center
which has helped increase demand for specialized processing and depth imaging projects.
The Company has a cash balance of approximately $75 million and backlog of $149 million at Jan. 31, 1999.
Conference Call
The Company's customary conference call will be tomorrow, March 3, at 11 a.m. EST. The dial-in number to participate is (800) 683-1535. If there is difficulty
with the aforementioned ''800'' number, dial (973) 628-6885 to be connected toll free. Tony Tripodo, Executive Vice President, Chief Financial Officer and
Treasurer and Rene VandenBrand, Vice President, Business Development will give a brief presentation followed by a Q&A session. A digital replay of the call and
subsequent Q&A session is available following its conclusion until close of business Wednesday, March 10. The telephone numbers for this replay are (888)
298-2157 or (402) 220-9159.
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things,
the Company's prospects and development for its operations and the finalizations of contractual agreements, all of which are subject to certain risks, uncertainties
and assumptions. These risks and assumptions, which are more fully described in reports filed with the Securities and Exchange Commission, include changes in
market conditions in the oil and gas industry as well as declines in prices of oil and gas. Should one or more of these risks or uncertainties materialize or should the
assumptions prove incorrect, actual results may vary in material respect from those currently anticipated.
Veritas DGC Inc. is a leading provider of land, transition zone and marine-based seismic data acquisition, seismic data processing, and multi-client data sales to the
petroleum industry in selected markets worldwide and, based on revenue, is the fifth largest geophysical services provider.
VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(In $ thousands, except per share amounts)
Three Months Ended Six Months Ended
January 31, January 31,
1999 1998 1999 1998
Revenues $ 101,652 $ 123,569 $ 248,451 $ 265,755
Costs and expenses:
Cost of services 70,015 80,804 173,526 174,057
Depreciation and
amortization 17,734 12,950 34,584 25,464
Selling, general
and administrative 4,501 4,254 9,057 8,793
Other (income) expense:
Interest 3,551 2,018 5,603 4,052
Other (2,630) (730) (2,403) (1,038)
Total costs and
expenses 93,171 99,296 220,367 211,328
Income before provision
for income taxes and equity
in (earnings) loss of
joint venture 8,481 24,273 28,084 54,427
Provision for income
taxes 3,057 6,505 8,939 16,154
Equity in (earnings)
loss of joint venture (12) 91 87 (723)
Net income $ 5,436 $ 17,677 $ 19,058 $ 38,996
Per share:
Earnings per common
share $ .24 $ .79 $ .84 $ 1.74
Weighted average
common shares 22,712 22,513 22,704 22,473
Earnings per common share --
assuming dilution $ .24 $ .76 $ .83 $ 1.68
Weighted average common shares --
assuming dilution 22,830 23,214 22,852 23,203
Contact:
Veritas DGC
Stephanie Schlimper, Investor Relations
713/512-8821
Tony Tripodo, Executive Vice President,
Chief Financial Officer and Treasurer
Rene VandenBrand, Vice President, Business Development |
