EARNINGS / Veritas DGC Inc. Q3 Earnings
Date: 05/28/98 5:40:30 PM
Dateline: Houston, Texas
Stock Symbol: VTS
Veritas DGC Inc. ("Company") today announced revenues and earnings for the
fiscal year 1998 third quarter as presented below with the comparative
amounts for the corresponding periods of fiscal year 1997.
(In US$ millions, except earnings per share)
Three Months Ended April 30, Nine Months Ended April 30,
---------------------------- ---------------------------
1998 1997 1998 1997
----- ----- ----- -----
Revenues $122.8 $ 86.8 $388.6 $253.9
Net income 16.1 6.1 55.1 17.8
Earnings per common share .71 .32 2.44 .95
Earnings per common share -
assuming dilution .69 .32 2.37 .93
"Our third quarter results clearly indicate that Veritas is on course for a
banner year in fiscal 1998," said Dave Robson, Chairman and CEO of the
Company. "We continue to benefit from improved operating efficiencies
through our use of current technology and from high margins in our rapidly
growing data library business. We anticipate these trends will continue to
have a positive impact on earnings going forward. The Company anticipates
meeting earning expectations for fiscal 1998 despite the current low
commodity price environment."
The Company's third quarter revenues increased 41% while net income grew by
164% over the same period of the previous year.
As the table below demonstrates, all service groups recorded year to year
growth in revenues. The gross margin for the third quarter of fiscal 1998
rose sharply to 39% from 27% for the prior year period. This increase was
mainly influenced by substantial sales of high-margin data library surveys
and data processing operations. Operating asset utilization remains high as
a result of strong market demand and good market visibility. The combined
operating backlog for the Company is $355.1 million, representing
approximately eight months of current sales, versus $226.6 million a year
ago.
Revenues by service group for the fiscal years' 1998 and 1997 third quarters
and nine months year-to-date are as follows:
(In US$ millions)
Three Months Ended April 30, Nine Months Ended April 30,
---------------------------- ---------------------------
1998 1997 1998 1997
----- ----- ------ ------
Land & Transition
Zone Acquisition $ 54.1 $ 42.2 $164.8 $126.2
Marine Acquisition 15.6 13.5 59.1 42.7
Data Processing 23.4 20.4 68.5 53.9
Data Library 29.7 10.7 96.2 31.1
----- ----- ----- -----
Total $122.8 $ 86.8 $388.6 $253.9
====== ====== ====== ======
Land & Transition Zone Acquisition
Revenues for land and transition zone data acquisition were $54.1 million, a
28% increase over the third quarter of last year. The growth reflects
capacity increase due to the purchase and rental of additional recording
channels plus the acquisition of two complete seismic crews in the Middle
East market since the previous third quarter.
Activities in the Canadian market were significantly lower than the previous
year due to warm winter weather and an early spring break-up. During April,
approximately 10,000 channels and associated equipment and people were
mobilized to the U.S. highlands and South America to expand production
capacity for backlog in those markets. Transition zone activities in the
U.S. remain strong with backlog into calendar year 1999. In South America,
the Company's activities are focused on Argentina and Bolivia with one crew
currently operating in Guatemala. In the Middle East, one of the Company's
crews has begun a two-year contract renewal while the other is working
various projects throughout the Middle East-Africa region.
Marine Acquisition
Marine acquisition revenues for the third quarter increased 16%, to $15.6
million, compared to last year's third quarter. During the quarter, several
of the Company's vessels were in dry dock for scheduled maintenance, repair
and renovation. The Polar Princess, Polar Search and the multi-boat
operation continue to record multi-client data in the Gulf of Mexico and have
backlog into calendar 1999. In the Asia Pacific region, the Ross Seal and
the Acadian Searcher are recording proprietary 2-D contracts and have a
significant backlog in that market. The Professor Kurentsov is completing a
project offshore Morocco and will be mobilized to Eastern Canada during early
June.
A highlight for the Company is the scheduled May 30, 1998 launch of the
Veritas Viking, the first of two Viking class vessels that the Company has
under construction. The launch date meets the originally scheduled timetable
announced by the Company last May. The Veritas Viking will undergo sea trials
during June and enter production during July 1998. Her power and equipment
handling capacity make her one of the most capable seismic vessels in the
industry. She will tow 8 to 12 streamers during production. The second
Viking class vessel is scheduled to join the Company's fleet in May 1999.
Data Processing
Capacity increases due to the addition of several multi-noded workstations
and a second NEC supercomputer led to a 15% increase in revenue to $23.4
million, compared to the third quarter of last year. Data volumes and market
demand for prestack time and depth migration processing continue to increase.
The Company's powerful workstations and supercomputers are dramatically
improving productivity and reducing turnaround time on large 3-D projects.
Productivity improvements and the impact of heavily pre-funded data library
projects have strongly increased gross margins for the service group. A
third NEC is scheduled for installation in Veritas' Singapore processing
center during July 1998. In South America, the Company recently opened a
processing center in Bolivia and is prospecting for expansion into Brazil.
Data Library
Data library revenues were up 178% to $29.7 million over the previous third
quarter. This service group continues to contribute significantly to the
Company's financial results with high margins as a result of heavy project
pre-funding and low book value of the data library asset. Three marine crews
are working continuously on data library projects in the Gulf of Mexico while
the further expansion of the Company's North Sea data library is scheduled to
begin during the summer operating season in that market. By fiscal 1998
year-end, the Company expects the size of its data library to approximate 1.8
million line kilometers. Notably, over 90% of the data library is 3-D and
more than 70% has been acquired during the last two years. Intense interest
in the Company's deepwater Gulf of Mexico surveys continues to provide for
most of the revenue increase. Currently, the Company holds a backlog in
excess of $100.0 million in funding commitments for its multi-client data
surveys and remains optimistic about further funding.
Should you have any questions regarding this earnings release or require
additional information, the Company has scheduled a telephone conference call
for Friday, May 29, 1998 at 11:00 a.m. EST. If you wish to participate,
please call 1-800-683-1535. Should you have difficulty with the
aforementioned "800" number, please phone 973-628-6885 to be connected toll
free.
If you are unable to take part in the telephone conference there will be a
digital replay of the call and subsequent Q&A session available following its
conclusion until close of business Friday, June 5, 1998. The telephone
number for the digital replay is 1-888-284-4561 or 1-402-220-4833.
VERITAS DGC INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(In US$ thousands, except earnings per share)
Three Months Ended Nine Months Ended
April 30, April 30,
------------------- ------------------
1998 1997 1998 1997
--------- -------- -------- --------
Revenues $ 122,810 $ 86,843 $ 388,565 $ 253,939
Costs and expenses:
Cost of services 75,381 63,344 249,438 189,646
Depreciation and amortization 14,385 10,142 39,849 28,662
Selling, general and administrative 5,405 3,221 14,198 7,603
Other (income) expense:
Interest 2,009 2,104 6,061 5,334
Merger related costs 597
Other (1,009) 535 (2,047) 811
-------- -------- --------- ---------
Total costs and expenses 96,171 79,346 307,499 232,653
-------- -------- --------- ---------
Income before provision for
income taxes and equity 26,639 7,497 81,066 21,286
Provision for income taxes 11,055 1,341 27,209 4,260
Equity in (earnings) loss of
joint venture (478) 70 (1,201) (735)
--------- -------- --------- ---------
Net income $ 16,062 $ 6,086 $ 55,058 $ 17,761
========== ======== ========= =========
Per share:
Earnings per common share $ .71 $ .32 $ 2.44 $ .95
========= ======== ========= =========
Weighted average common shares
(in thousands) 22,645 18,819 22,535 18,611
========= ======== ========= =========
Earnings per common share
- assuming dilution $ .69 $ .32 $ 2.37 $ .93
---------- -------- --------- ---------
Weighted average common shares
- assuming dilution (in thousands) 23,347 19,152 23,273 19,048 |
