- Second quarter 2004 revenues of $62.3 million and earnings per share
- Initial sale of System Four Digital-Analog system
- Company raises earnings guidance for 2004
HOUSTON, July 28 /PRNewswire-FirstCall/ — Input/Output, Inc. (NYSE: IO)
today announced second quarter 2004 net income of $4.2 million, or $0.07 per
share, on revenues of $62.3 million compared to a net loss of $13.7 million,
or $0.27 per share, on revenues of $34.6 million for the same period a year
Bob Peebler, I/O’s President and Chief Executive Officer, said, “The
second quarter of 2004 will prove to be the period when the key elements of
I/O’s future were solidly put in place. We successfully completed the
acquisition of GX Technology and the simultaneous equity offering of
approximately 22,930,000 shares of common stock. We also launched and sold
our first System Four Digital-Analog system and continued to deliver our new
VectorSeis Ocean seabed system in accordance with the contract signed in the
SECOND QUARTER 2004
Second quarter revenues of $62.3 million were above previous guidance of
$45 to $55 million after excluding the $5.6 million of revenues contributed by
GX Technology. Concept Systems, which was acquired in February of this year,
contributed revenues of $4.7 million during the quarter. Land imaging
revenues were $36.9 million compared to $22.4 million a year ago, and marine
imaging revenues were $13.1 million compared to $10.9 million a year ago. The
land imaging division had an increase in acquisition systems sales, including
the sale of I/O’s first System Four Digital-Analog system. The marine imaging
division enjoyed attractive margins as the increased sales were in higher
margin offerings such as VectorSeis Ocean and Digi positioning products.
Gross margin for the second quarter improved to 35% from 9% for the same
period a year ago primarily due to higher margin sales in the land and marine
imaging divisions and higher margin sales of Concept Systems software
products. Operating expenses for the second quarter were 26% of revenues
compared to 38% for the second quarter last year.
Income from operations in the quarter was $5.6 million compared to a loss
from operations of $10.3 million in the second quarter of 2003. EBITDA
(earnings before net interest expense, taxes, depreciation and amortization)
for the second quarter was $9.7 million compared to a negative $10.6 million
for the second quarter of last year. You can find a reconciliation of EBITDA
to reported earnings at the end of this press release.
FIRST HALF 2004
Revenues for the six months ended June 30, 2004 increased 30% from
$75.7 million in the first half of 2003 to $98.6 million this year.
Approximately half of this increase is due to increases within the land and
marine imaging divisions, with the other half due to the acquisitions of GX
Technology and Concept Systems.
Gross margin for the first six months of 2004 rose to 35% compared to 15%
in the first six months of 2003. EBITDA for the first six months of 2004 was
$13.2 million compared to a negative $11.0 million for the first six months of
2003. Income from operations increased to $6.6 million compared to a loss
from operations in the prior year of $15.4 million. For the six months ended
June 30, 2004, I/O recorded net income of $3.6 million, or $0.07 per share, on
revenues of $98.6 million compared to a net loss of $19.0 million, or $0.37
per share, on revenues of $75.7 million for the same period a year ago.
The following statements are based on our current expectations. These
statements are forward looking and actual results may differ materially.
Factors affecting these forward-looking statements are detailed below.
Mr. Peebler stated, “Looking at the first half of 2004, we are pleased
with the results so far. We remain on plan to meet this year’s objectives,
with solid prospects ahead. The additions of GX Technology and Concept
Systems added the key pieces we needed to build a seismic solutions company.
We have shipped $15 million of VectorSeis systems through the first half, well
on our way to our $40 million goal. VectorSeis sales are expected to grow in
both the land and marine environments as acceptance of this new technology
Mike Kirksey, Executive Vice President and Chief Financial Officer,
stated, “Based on our current pipeline of business, the expected impact of our
new product introductions, and the acquisitions of GX Technology and Concept
Systems, we now expect 2004 revenues to range between $255 and $270 million.
Much of our projected top line growth is expected to come from continued
market penetration of our acquisition systems, an overall growth trend evident
in the seismic market, both land and marine, and continued growth of GX
Technology’s Integrated Seismic Solutions offering. We expect full year 2004
gross margin percentage to be in the low 30’s, EBITDA to range between $35 and
$45 million and earnings of $0.20 to $0.25 per share for the year. As a
result, for the third quarter of 2004, we expect revenues to range between
$75 and $85 million and earnings per share to range between $0.06 and $0.10.”
Issuance of Inducement Options
In connection with its recent acquisition of GX Technology, I/O has
entered into Employment Inducement Stock Option Agreements with certain key
employees of GX Technology, providing for the grant of stock options to each
such key employee to purchase shares of common stock of I/O as material
inducements to their joining the company. The options are exercisable for an
aggregate amount of 434,000 shares of common stock and include options to
purchase 85,000 shares of common stock of I/O granted to Michael Lambert,
President of GX Technology.
I/O has scheduled a conference call for Thursday, July 29, 2004, at
9:30 a.m. eastern time. To participate in the conference call, dial
303-262-2141 at least 10 minutes before the call begins and ask for the
Input/Output conference call. A replay of the call will be available
approximately two hours after the live broadcast ends and will be accessible
until August 5, 2004. To access the replay, dial 303-590-3000 and use pass
Investors, analysts and the general public will also have the opportunity
to listen to the conference call live over the Internet by visiting
http://www.i-o.com . Also, an archive of the web cast will be available
shortly after the call on the company’s website for approximately 90 days.
I/O is the world’s leading, technology-only seismic services provider. The
company provides cutting-edge seismic acquisition equipment, software, and
planning and seismic processing services to the global oil and gas industry.
The company’s technologies are applied in both land and marine environments,
in traditional 2D and 3D surveys, and in rapidly growing areas like time-lapse
(4D) reservoir monitoring and full-wave imaging. I/O has offices in the
United States, Canada, Europe, China, Russia and the Middle East. Additional
information is available at http://www.i-o.com .
The information included herein contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements include statements concerning capital outlays by E&P companies and
seismic contractors, future VectorSeis revenues, and fourth quarter revenues,
gross margin, and net income per share. Actual results may vary materially
from those described in these forward-looking statements. All forward-looking
statements reflect numerous assumptions and involve a number of risks and
uncertainties. These risks and uncertainties include the timing and
development of the Company’s products and services and market acceptance of
the Company’s new and revised product offerings; risks associated with the
Company’s restructuring program; risks associated with competitor’s product
offerings and pricing pressures resulting there from; the Company’s inability
to produce products to preserve and increase market share; and technological
and marketplace changes affecting the Company’s product line. Additional risk
factors, which could affect actual results, are disclosed by the Company from
time to time in its filings with the Securities and Exchange Commission.
Tables to follow INPUT/OUTPUT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Net sales $62,326 $34,562 $98,614 $75,739 Cost of sales 40,525 31,588 64,552 64,308 Gross profit 21,801 2,974 34,062 11,431 Operating expenses: Research and development 5,380 4,955 9,456 10,473 Marketing and sales 5,016 3,025 8,314 5,836 General and administrative 5,852 5,362 10,545 9,427 Gain on sale of assets (47) (82) (896) (37) Impairment of long- lived assets --- --- --- 1,120 Total operating expenses 16,201 13,260 27,419 26,819 Income (loss) from operations 5,600 (10,286) 6,643 (15,388) Interest expense (1,497) (843) (2,993) (2,188) Interest income 290 525 758 1,116 Fair value adjustment of warrant obligation --- (1,712) --- (841) Write-down of investment --- (2,036) --- (2,036) Other income 140 369 158 663 Income (loss) before income taxes 4,533 (13,983) 4,566 (18,674) Income tax expense (benefit) 347 (297) 938 291 Net income (loss) $4,186 $(13,686) $3,628 $(18,965) Basic and diluted income (loss) per common share $.07 $(0.27) $.07 $(0.37) INPUT/OUTPUT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (Unaudited) June 30, December 31, 2004 2003 ASSETS Current assets: Cash and cash equivalents $36,065 $59,507 Restricted cash 845 1,127 Accounts receivable, net 58,630 34,270 Current portion notes receivable, net 11,920 14,420 Unbilled revenue 9,791 --- Inventories 56,511 53,551 Prepaid expenses and other current assets 4,674 3,703 Total current assets 178,436 166,578 Notes receivable 5,264 6,409 Net assets held for sale 2,430 3,331 Property, plant and equipment, net 39,619 27,607 Seismic data library 16,735 --- Deferred income taxes 1,149 1,149 Goodwill, net 148,270 35,025 Other assets, net 74,569 9,105 Total assets $466,472 $249,204 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities of long-term debt $5,161 $2,687 Accounts payable 23,035 12,531 Accrued expenses 28,956 15,833 Deferred revenue 13,134 2,060 Total current liabilities 70,286 33,111 Long-term debt, net of current maturities 79,976 78,516 Other long-term liabilities 3,625 3,813 Stockholders' equity: Common stock 770 522 Additional paid-in capital 472,389 296,663 Accumulated deficit (154,909) (158,537) Accumulated other comprehensive income 579 1,292 Treasury stock (5,905) (5,826) Unamortized restricted stock compensation (339) (350) Total stockholders' equity 312,585 133,764 Total liabilities and stockholders' equity $466,472 $249,204 Reconciliation of EBITDA to Net Income (Non-GAAP Measures) (In thousands) (Unaudited) EBITDA is a non-GAAP measurement that is presented as an additional indicator of operating performance and is not a substitute for net income (loss) or income (loss) per share calculated under generally accepted accounting principles (GAAP). We believe that EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to service our debt. The calculation of EBITDA shown below is based upon amounts derived from the company's financial statements prepared in conformity with GAAP. Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Net income (loss) $4,186 $(13,686) $3,628 $(18,965) Interest expense 1,497 843 2,993 2,188 Interest income (290) (525) (758) (1,116) Income tax expense (benefit) 347 (297) 938 291 Depreciation and amortization expense 3,999 3,035 6,421 6,609 EBITDA $9,739 $(10,630) $13,222 $(10,993) CONTACTS: J. Michael Kirksey Chief Financial Officer Input/Output (281) 879-3672 Jack Lascar, Partner Karen Roan, Vice President DRG&E (713) 529-6600
SOURCE Input/Output, Inc.
CONTACT: J. Michael Kirksey, Chief Financial Officer of Input-Output,
Inc., +1-281-879-3672; or Jack Lascar, Partner, or Karen Roan, Vice President,
both of DRG&E, +1-713-529-6600, for Input-Output, Inc.