Billy F. Mitcham, Jr., the Company's President and CEO, stated, "We continue to experience high demand for our equipment, driven by the strong worldwide market for seismic services. From a seasonal standpoint, our fiscal third quarter core leasing activity delivered solid performance with revenues up 24 percent from the second quarter as we penetrate new markets globally.
"We continue to see strong seismic activity across our customer base with more complex surveys, which generally require more equipment, as most oil and gas companies are striving to expand their reservoir base. This seismic expansion is taking place in both land and marine, and we believe that we will continue to be a major beneficiary of this market growth. In response to the increasing demand for our services, we have committed to significantly increase our lease pool. We expect to have added approximately $25.0 million of new equipment to our lease pool by the end of fiscal 2007, or shortly thereafter. Included in this amount is the purchase of 5,000 stations (15,000 channels) of DSU3 428XL pursuant to our recently announced arrangement with Sercel. Looking ahead, we expect exploration spending by the oil & gas companies to continue to grow, which supports our very favorable outlook for the seismic industry."
The Company reported net income of $3.9 million, or $0.38 per diluted share, for the third quarter of fiscal 2007 compared to net income of $2.9 million, or $0.29 per diluted share, for the third quarter of fiscal 2006. Total revenues for the third quarter increased 30 percent to $12.7 million compared to $9.8 million in the same period last year. The majority of the revenue increase resulted from a 133 percent increase in other equipment sales, mainly from the sale of new seismic equipment. Seamap revenues increased $946,000 over last year's third quarter, while equipment leasing sales declined $515,000 from an unusually strong third quarter a year ago due to a large job in South America.
Gross profit in the third quarter of fiscal 2007 declined to 46.4 percent from 55.2 percent in the third quarter of last year. The decline in gross profit was due primarily to a higher proportion of lower margin other equipment sales, as well as higher costs associated with a design issue in one of the versions of the new GunLink 4000 system that was introduced to the marketplace in the first quarter of fiscal 2007. Design changes have already been implemented, and the Company expects these changes to be completed in the next 60 days. The Company currently has $7.0 million of firm orders for the GunLink 4000 in its backlog.
EBITDA (net income before interest, taxes, depreciation and amortization) for the third quarter was $4.5 million, or 36 percent of revenue, compared to $5.1 million, or 52 percent of revenue, in the same period last year. EBITDA, which is not a measure determined in accordance with generally accepted accounting principles ("GAAP"), is defined and reconciled to reported net income in Note A under the accompanying financial tables.
For the first nine months of fiscal 2007, the Company reported net income of $8.6 million, or $0.84 per diluted share, compared to $6.2 million, or $0.64 per diluted share, in the same period in fiscal 2006. Due to the improved financial performance of the Company over the past two years and its expectation of continued profitability, Mitcham is now in a position to recognize certain deferred tax assets that arose in prior years primarily as a result of net operating loss carryovers. For the first nine months of fiscal 2007, the Company has recognized approximately $2.0 million in deferred tax benefits.
Total revenues for the first nine months of fiscal 2007 increased 55 percent to $37.8 million compared to $24.5 million in the same period last year. Year-to-date EBITDA rose to $13.2 million in fiscal 2007, or 35 percent of revenue, compared to $12.6 million, or 51 percent of revenue, during the same period in fiscal 2006.
Mitcham Industries, Inc., a geophysical equipment supplier, offers for lease or sale, new and "experienced" seismic equipment to the oil and gas industry, seismic contractors, environmental agencies, government agencies and universities. Headquartered in Texas, with sales and services offices in Calgary, Canada; Brisbane, Australia; Singapore; Ufa, Bashkortostan, Russia; and the United Kingdom and with associates throughout Europe, South America and Asia, Mitcham conducts operations on a global scale and is the largest independent exploration equipment lessor in the industry.
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