Global Geophysical Announces Fourth Quarter and Full Year 2012 Earnings

HOUSTON, Feb. 25, 2013 (GLOBE NEWSWIRE) -- Global Geophysical Services, Inc. (NYSE:GGS) today reported fourth quarter revenues of $55.3 million, a loss from operations of $12.0 million, a net loss of $28.6 million and a loss of $0.76 per share.

Results for the fourth quarter included several non-recurring charges. These non-recurring charges include an income tax expense charge of $14.3 million related to foreign tax credits and $1.7 million in crew shutdown costs.  The quarter results also included the provision of $3.0 million bad debt expense.

Global's revenues were $339.0 million for the full year 2012, compared with $385.4 million for 2011, a decrease of 12%. Operating income for 2012 was $42.5 million, compared to an operating income of $44.9 million for 2011. EBITDA, adjusted for Multi-client amortization was $70.6 million for the full year 2012, compared with $74.3 million for the full year 2011.

"Global's fourth quarter results were a disappointment as execution issues in certain programs and delays in library late sale closures impacted the top line. Since joining the company four months ago, we have started and are continuing to make a number of changes to address the issues contributing to the fourth quarter's performance. We expect those changes to result in improved operating performance starting in the second half of 2013," commented Richard White, President and Chief Executive Officer.

"The company's backlog at the end of December 2012 was $101 million, comprised of $35 million for Proprietary Services and $66 million for Multi-client Services. Although down from the end of the third quarter, we have added a number of additional Proprietary programs since the start of the year to the company's backlog. On a pro-forma basis, the effect of recent program additions would have increased backlog above third quarter levels. Going forward, we are focused on shifting our data acquisition revenue mix to a greater weighting of proprietary programs.

"Despite the most recent performance, the overall market environment remains robust. During the fourth quarter, we expanded our crew count in the Kurdistan region of Iraq and commenced new data acquisition programs in Paraguay. In further support of the company's international operations, we are establishing a new office in Dubai to support our Europe, Africa, Middle East (EAME) operations. Although previously managed from the U.S., we are committed to creating a presence close to our customers and key partners to serve this vital region.

"Global is also making meaningful progress on its Microseismic services offerings. Our Tomographic Fracture Imaging^TM (TFI) technology is garnering broader acceptance and has now also been applied in the reprocessing of microseismic data that had been previously acquired and processed using alternative methods. We believe that Global is well positioned to support the evolving reservoir characterization market using a combination of our TFI technologies, our data library assets, and Autoseis recording platform.

"Although it will take several quarters to implement the transition we are pursuing, we remain confident that the company's investments in its asset portfolio and service offerings are well positioned to support the current and emerging needs of our worldwide customer base," concluded White.

Fourth Quarter Results

The following table sets forth our consolidated revenues for the three months ended December 31, 2012 and for the corresponding period of 2011 (amounts in millions):

We recorded revenues of $55.3 million for the three months ended December 31, 2012 compared to $113.1  million for the same period ended in 2011, a decrease of $57.8  million, or 51% .

We recorded revenues from Proprietary Services of $28.9  million for the three months ended December 31, 2012, compared to $62.3 million for the same period in 2011, a decrease of $33.4  million, or 54%. Of this amount, the decrease related to our international Proprietary operations was $29.2  million, primarily due to a decrease in our crew activities in Algeria, Colombia, and Brazil.

Multi-client Services generated revenues of $26.4  million for the three months ended December 31, 2012 compared to $50.8  million for the same period of 2011, a decrease of $24.4  million, or 48%.  The decrease was primarily due to the decreased Multi-client Services operations in the U.S. The $26.4 million in Multi-client Services revenues included $5.6 million of late sale revenues, $20.7  million of pre-commitment revenues, and $0.1 million in non-cash data swap transactions. This compared to $14.2 million in late sales revenues, $35.5 million of pre-commitment revenues, and $1.1 million in non-cash data swap transactions during the same period of 2011.

Operating margin for the quarter ended December 31, 2012 was (21.7%) of revenue, compared to 13.5% in the same period of 2011. 

Included within operating expenses is Multi-client Services amortization of $17.7  million, representing a 67% average amortization rate for the quarter. Gross depreciation expense for the quarter was $11.9 million, of which $2.0 million was capitalized in connection with our Multi-client Services library investments resulting in net depreciation expense of $9.9  million. 

Fiscal 2012 Results

The following table sets forth our consolidated revenues for the year ended December 31, 2012 and for the corresponding period of 2011 (amounts in millions):

We recorded revenues of $339.0 million for the year ended December 31, 2012 compared to $385.4 million for the year ended December 31, 2011, a decrease of $46.4 million, or 12% .

We recorded revenues from Proprietary Services of $182.5 million  for the year ended December 31, 2012 compared to $208.0 million for the year ended December 31, 2011, a decrease of $25.5 million, or 12% . Of this amount, the decrease related to Latin America Proprietary operations was $44.0 million, largely driven by a decrease in our crew activities in Colombia in 2012. In Europe, Africa, and Middle East ("EAME"), during the years ended December 31, 2012 and 2011, we recorded revenues of $33.7 million and $32.0 million, respectively. In North America, we had $48.7 million in revenues from Proprietary Services for the year ended December 31, 2012 compared to $32.0 million for the year ended December 31, 2011.

Multi-client Services generated revenues of $156.5 million for the year ended December 31, 2012 compared to $177.4 million for the same period of 2011, a decrease of $20.9 million, or 12%.  The $156.5  million in Multi-client Services revenues included $41.6 million of late sale revenues, $109.5  million of pre-commitment revenues, and $5.4 million in non-cash data swap transactions. This compared to $48.3 million in late sales revenues, $126.0  million of pre-commitment revenues, and $3.1  million in non-cash data swap transactions during the same period of 2011.

Income from operations for the year ended December 31, 2012 was 12.5%  of revenue, compared to 11.7% in the same period of 2011. 

Included within operating expenses is Multi-client Services amortization of $103.3 million, representing a 66%  average amortization rate for the period.  Gross depreciation expense for the year ended December 31, 2012 was $40.5 million, of which, $11.3 million was capitalized in connection with our Multi-client Services investments resulting in a net depreciation expense of $29.2 million. Table 2 provides a reconciliation of Net Income (Loss) to EBITDA (a non-GAAP measure).

About Global Geophysical Services, Inc.

GGS provides an integrated suite of Geoscience solutions to the global oil and gas industry including high-resolution RG-3D Reservoir Grade^® seismic data acquisition, Multi-client data library products, micro seismic monitoring, seismic data processing, data analysis, and interpretation services. GGS combines experience, innovation, operational safety, and environmental responsibility with leading edge geophysical technology to facilitate successful E&P execution.  GGS' combined product and service offerings provide the ability to Gain InSight™ in the exploration and production of hydrocarbons. GGS is headquartered in Houston, Texas. To learn more about GGS, visit www.GlobalGeophysical.com.

The Global Geophysical Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7300.

⁽¹⁾AUTOSEIS^® is a registered trademark of GGS, and hereinafter all references to the term AUTOSEIS or Autoseis shall refer to AUTOSEIS^®.

Forward-Looking Statements

The statements in this press release that are not historical statements, including statements regarding future financial performance, are forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical facts, included in this earnings release that address activities, events or developments that Global Geophysical expects, believes or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements include but are not limited to statements about business outlook for the year, backlog and bid activity, business strategy, and related financial performance and statements with respect to future events. Such forward-looking statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, industry conditions, market position, future operations, profitability, liquidity, backlog, capital resources and other information currently available to management and believed to be appropriate.

Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to the volatility of oil and natural gas prices, disruptions in the global economy, dependence upon energy industry spending, delays, reductions or cancellations of service contracts, high fixed costs of operations, weather interruptions, inability to obtain land access rights of way, industry competition, limited number of customers, credit risk related to our customers, asset impairments, the availability of capital resources, and operational disruptions. Global Geophysical Services Form 10-K for the year ended December 31, 2011, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect Global's business, results of operations, and financial condition. These forward-looking statements reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategies and liquidity. Although the Company believes that the expectations reflected in such statements are reasonable, the Company can give no assurance that such expectations will be correct. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. We assume no obligation to update any such forward-looking statements.

Backlog estimates are based on a number of assumptions and estimates including assumptions related to foreign exchange rates, proportionate performance of contracts and our valuation of assets, such as seismic data, to be received by us as payment under certain agreements. The realization of our backlog estimates are further affected by our performance under term rate contracts, as the early or late completion of a project under term rate contracts will generally result in decreased or increased, as the case may be, revenues derived from these projects. Contracts for services are occasionally modified by mutual consent and may be cancelable by the client under certain circumstances. Consequently, backlog as of any particular date may not be indicative of actual operating results for any future period. More information can be found set forth under "Risk Factors" in our Form 10-K filed with the Securities and Exchange Commission.

Unless the context otherwise indicates, references in this press release to "Global Geophysical Services," "Global Geophysical," "Global," "GGS," the "Company," "we," "us," "our," or "ours" refer to Global Geophysical Services, Inc. and its direct and indirect subsidiaries.

Non-GAAP Financial Measure

EBITDA is a non-GAAP financial measure as defined by Regulation G promulgated by the U.S. Securities and Exchange Commission. The Company believes EBITDA is useful to an investor in evaluating our operating performance because this measure is widely used by investors in the energy industry to measure a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon, among other factors, accounting methods, book value of assets, capital structure and the method by which assets were acquired. The Company further believes EBITDA helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure and asset base from the Company's operating structure. EBITDA is also used as a supplemental financial measure by the Company's management in presentations to our board of directors, as a basis for strategic planning and forecasting, and as a component for setting incentive compensation.

EBITDA has limitations as an analytical tool and should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income and operating income and these measures may vary among other companies. Limitations to using EBITDA as an analytical tool include:

• EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or capital commitments;
• EBITDA does not reflect changes in, or cash requirements necessary to service interest or principal payments on, our debt;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements;
• and other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

Conference Call and Webcast Information

Global Geophysical has scheduled a conference call as detailed below:

Investors and analysts are invited to participate in the call by phone or via the internet webcast at: http://ir.globalgeophysical.com/.

The webcast from the call will be available for on-demand replay on our investor relations website at: http://ir.globalgeophysical.com/results.cfm