SAExploration Holdings, Inc. (NASDAQ: SAEX, OTCBB: SAEXW) today
announced selected unaudited preliminary results for the fourth quarter
(“Q4”) and fiscal year ended December 31, 2013 and provided summary
financial guidance for fiscal year 2014. The Company further provided an
update on the status of its fiscal year 2013 financial audit and
disclosed its intention to restate its unaudited second quarter (“Q2”)
and third quarter (“Q3”) 2013 financial statements.
Selected Fourth Quarter 2013 Highlights
-
Consolidated net revenues are expected to be approximately $70
million, up roughly 55% from Q4 2012 net revenues of approximately $46
million
-
Contracted backlog of $292 million, as of December 31, 2013, up 29%
from $227 million on December 31, 2012
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Six new project awards totaling $192 million announced
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Presence expanded into Brazil and North Africa
Brian Beatty, CEO and President of SAE, commented, “2013 has been a
transformative, rewarding, and yet, challenging year for SAE. We are
still actively working on our transition from a private to a public
company, and we remain very appreciative of the support received from
our stockholders during the process as we adapt our business to the new
public company environment. While we continue to work to close out our
first annual filing as an operating public company, we are very pleased
with our return to normal operations during the fourth quarter, as
demonstrated by our Q4 revenue growth. Our customers will continue to
benefit from our unique ability to provide complete and comprehensive
logistical and geophysical services in complex and challenging regions
of the world, as we profit from access to the public markets, an
elevated industry profile, and a strengthened ability to execute our
growth strategy and to enhance long-term value for stockholders.”
Mr. Beatty continued, “We are optimistic about 2014 and we expect to
experience continued growth in many of our core markets. In particular,
South America and Alaska have exhibited strong levels of bidding
activity, where we continue to strengthen our backlog through the
addition of new multi-season projects. We were able to capitalize on
some of these opportunities recently, as announced in Q4, with the
awarding of $192 million of new projects throughout both regions. We
continue to view Southeast Asia and North Africa as strong growth
catalysts for us going forward, as we continue developing our presence
in Brazil. However, we expect Canada to remain a relatively small market
for us going forward, especially in light of the recent pullback in
demand for seismic services in the region. We believe we are well
positioned internationally in key growth areas around the world. Our
diversification and strategic focus on these new or under-developed
areas will continue to benefit our stockholders as we look to maximize
growth through the optimal utilization of currently available resources
and equipment. We look forward to writing the next chapter of our story,
with a focus on continued promotion of risk reduction through a
dedication to quality, safety and excellent operational performance.”
Selected Unaudited Preliminary Results
Revenues for Q4 2013 are expected to be approximately $70 million
compared to approximately $46 million in Q4 2012. Revenue growth during
the quarter was primarily due to our continued focus on new project
award generation in South America and Alaska during 2013. Additionally,
Q4 2013 revenues were positively impacted by previously delayed projects
in Bolivia and Colombia, as disclosed in the Company’s Q3 2013 earnings
release, being realized during Q4 2013.
In 2013, revenues for the annual period are expected to decrease to
approximately $245 million from approximately $257 million in 2012. Much
of this decrease in annual revenues was the result of previously
reported issues encountered during Q3 2013 related to project delays in
South America and the failure of a customer in Alaska to resume a
project that was previously paused. In addition, 2012 had a large amount
of third-party pass-through revenues totaling approximately $90 million,
on which the Company charged only a small administrative fee, compared
to third-party pass-through revenues in 2013 of approximately $17
million.
As of December 31, 2013, the Company’s backlog rose to approximately
$292 million from $227 million on December 31, 2012. Major changes to
the Company’s backlog that occurred during the year included the:
-
Addition of $316 million of announced project awards;
-
Removal of $114 million related to the further delay of a
previously-paused 3D project in Alaska; and
-
The completion, in whole or in part, of multiple projects during the
year.
The Company’s backlog remains strong. This year demonstrated SAE’s
ability to quickly compensate for a sudden or unexpected loss of revenue
due to an extraordinary event, such as the long-term postponement of a
major contract.
SAE anticipates approximately 89% of the $292 million in backlog to be
realized during 2014 and the remainder during 2015. However, the
approximate estimations of realization from the backlog can be impacted
by a number of factors, including customer delays or cancellations,
permitting or project delays and environmental conditions.
Restatement of Second and Third Quarter 2013 Financials
SAE has determined it will restate, and investors should not rely upon,
its previously filed interim financial statements for Q2 and Q3 2013,
following management’s discussion of the matter with the audit committee
of SAE’s board of directors.
The restatements result from information that came to SAE’s attention in
connection with the preparation and review of its annual financial
statements to be included in Form 10-K for fiscal year 2013, which is
ongoing. The Company is currently working to finalize its fiscal year
2013 financial statements. Although the review is ongoing and additional
items may be included in the restatements, certain adjustments have been
identified. Among these adjustments is an estimated pre-tax expense of
approximately $987,000 to be recorded in our interim consolidated
financial statements as of and for the three and six months ended June
30, 2013, and as of and for the nine months ended September 30, 2013, to
fully recognize all share-based compensation expense related to the
prior SAE stockholders’ restricted shares, which were vested on an
accelerated basis before the merger closed in Q2 2013. The Company has
also identified a further adjustment to Q2 2013 of an estimated pre-tax
expense of approximately $554,000, and an adjustment for the same type
of expense in Q3 2013 estimated to be approximately $200,000, both of
which are to also be recorded in the interim financial statements
described above to correct the overstatement of the current asset
“Deferred costs on contracts” relating to certain expenses in Colombia
and Peru that were incorrectly deferred and should have been expensed.
SAE affirms that its review of fiscal year 2013 financials is ongoing
and the restatements may include additional items not discussed in this
announcement. Once the review is completed, SAE expects to file its Q2
and Q3 2013 amendments in advance of its fiscal year 2013 Form 10-K.
Summary Financial Guidance for Fiscal Year 2014
As a result of the expected growth in international seismic spending, in
addition to the strength of its current backlog, SAE expects to record
revenue of approximately $400 - $450 million during 2014. While possibly
impacted by compression due to growth into new markets, SAE estimates
Modified EBITDA1 for 2014 to range from approximately $45 -
$55 million.
These forward estimations are based on current market conditions and are
subject to change.
Warrant Exchange
In early February 2014, SAE completed its previously disclosed warrant
exchange offer for its outstanding warrants to purchase 15 million
shares of common stock. Under the warrant exchange offer, each warrant
holder had the opportunity to receive one share of SAE common stock in
exchange for every ten warrants outstanding.
Approximately 14.4 million warrants, or approximately 96% of all
outstanding warrants, were validly tendered and accepted by SAE. The
resulting effect to SAE’s common shares outstanding was a net increase
of approximately 1.4 million new common shares.
The warrants that were not tendered in the exchange remain outstanding
and are exercisable in accordance with their terms.
Investor Conference Call
SAE will host a conference call on Wednesday, March 19, 2014 at 10:00
a.m. Eastern Time to discuss the Company’s selected unaudited
preliminary results for Q4 and the fiscal year ended December 31, 2013.
Participants can access the conference call by dialing (855) 433-0934
(toll-free) or (484) 756-4291 (international). The Company will also
offer a live webcast of the conference call on the Investors
section of SAE’s website at www.saexploration.com.
To listen to the live call via the Company’s website, please go to the
website at least 15 minutes prior to the start of the call to register
and download any necessary audio software. A replay of the webcast for
the conference call will be archived on the Company’s website and can be
accessed by visiting the Investors section of SAE’s website.
About SAExploration Holdings, Inc.
SAE is a leading, vertically-integrated provider of 2D, 3D and 4D
seismic data and logistical services with operations throughout South
America, North America, and Southeast Asia. SAE specializes in
logistically complex regions of the world, and provides a wide range of
services to its clients, including surveying, program design, logistical
support, data acquisition, processing, infrastructure implementation,
camp services, catering, environmental assessment and community
relations. SAE services its multinational client base from offices in
Houston, Alaska, Canada, Peru, Colombia, Bolivia, Brazil, New Zealand
and Malaysia. For more information, please visit SAE’s website at www.saexploration.com.
The information in SAE’s website is not, and shall not be deemed to be,
a part of this notice or incorporated in filings SAE makes with the
Securities and Exchange Commission.
Forward Looking Statements
This press release contains certain "forward-looking statements" within
the meaning of the federal securities laws. These statements can be
identified by the use of words or phrases such as "believes,"
"estimates," "expects," "intends," "anticipates," "projects," "plans
to," “will,” “should” and variations of these words or similar words.
These forward-looking statements may include statements regarding SAE’s
financial condition, results of operations and business and SAE’s
expectations or beliefs concerning future periods. These statements are
subject to risks and uncertainties which may cause actual results to
differ materially from those stated in this release. These risks and
uncertainties include fluctuations in the levels of exploration and
development activity in the oil and gas industry, intense industry
competition, a limited number of customers, the need to manage rapid
growth, delays, reductions or cancellations of service contracts,
operational disruptions due to seasonality, weather and other external
factors, crew productivity, the availability of capital resources,
substantial international business exposing SAE to currency fluctuations
and global factors including economic, political and military
uncertainties, the need to comply with diverse and complex laws and
regulations, and other risks incorporated by reference to SAE’s filings
with the Securities and Exchange Commission. Certain risks and
uncertainties related to SAE’s business are or will be described in
greater detail in SAE’s filings with the Securities and Exchange
Commission. The information set forth herein should be read in light of
such risks. Except as required by applicable law, SAE is not under any
obligation to, and expressly disclaims any obligation to, update or
alter its forward-looking statements, whether as a result of new
information, future events, changes in assumptions or otherwise.
1 Modified EBITDA is defined as net income (loss) plus
interest expense, less interest income, plus unrealized loss on change
in fair value of notes payable to related parties, plus income taxes,
plus depreciation and amortization, plus non-recurring major expenses
outside of operations. Modified EBITDA is a non-GAAP measure of
financial performance.
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