SAExploration (SAEX) Stock: Soaring On Financial Results

SAExploration Holdings Inc (NASDAQ: SAEX) is having an incredibly strong start to the trading session this morning, and for good reason. The company reported its financial results, showing strong growth on all fronts. Today, we’ll talk about:

  • The financial results;
  • what we’re seeing from SAEX stock as a result; and
  • what we’ll be watching for ahead.

SAEX Announces Strong Financial Results

As mentioned above, SAExploration is having an incredibly strong start to the trading session this morning after reporting its financial results. The results were unaudited and provided via press release early this morning.

In the release, SAEX said it generated revenue of $93.4 million in the first quarter. That proved to be incredible year over year growth of 151.6% from $37.1 million.

Gross profits came to $20.3 million, representing 21.8% of revenue. That figure climbed 133.7% from $8.7 million representing 23.4% of revenue one year ago.

Net income also proved to be a big hit. During the first quarter, the comapny’s net income came to $3.8 million, or $0.50 basic income per share and $0.26 diluted income per share. Yet again, this figure saw impressive growth. In the same quarter one year ago, SAEX generated a loss of $2.3 million, or $92.06 basic and diluted loss per share.

Finally, the company saw incredibly strong backlog growth. The company now has a backlog of $183.9 million through Q1 2020. The company also had $431.9 million of bids outstanding as of March 31, 2019.

In a statement, Jeff Hastings, Chairman and CEO at SAE, had the following to offer:

Operational execution at a crew level, disciplined strategy, sound decision making, and strong liquidity allowed us to post one of the better first quarters in our recent history. As expected, we have seen progressive growth in the ocean-bottom marine market. And a return to activity on the North Slope in Alaska this past winter season resulted in utilization levels not seen in several years.

Additionally, the business we have built in the Lower 48 has diversified our customer base and introduced additional opportunities to deploy our new equipment and capture cost synergies through a reduction in rental expense. While we continue to expect some continuing integration-related expenses before our new overhead and fixed cost profiles normalize, we are excited to see the positive impact from our acquisition of Geokinetics’ assets last year. We are ahead of our own expectations with respect to the timing of realizing the monetary benefits of the difficult choices we’ve made over the past few years.

Mr.The growth in our contracted backlog and the rate at which we have been able to replace the revenue generated from our backlog are encouraging trends. We are seeing an improvement in activity levels primarily in Alaska and ocean-bottom marine markets worldwide. Our recent $25 million ocean-bottom marine award in Brazil expands our geographic footprint offshore to include Asia Pacific, the Middle East, West Africa, the North Sea, and now South America.

We continue to see a positive imbalance in the marine market between the number of producers allocating capital for new seismic expenditures, and the number of service providers and equipment available to perform the desired projects. In Alaska, much of the return to growth in seismic activity has been driven by declining production rates and the advancement of new recording technologies, which when combined with higher channel count and higher density crew designs, have resulted in superior imaging quality than what may exist currently from pre-existing data.

Additionally, due primarily to the instability in commodity prices, in conjunction with a short seasonal window to perform services, it appears that many of the producers on the North Slope have conservatively replaced reserves from existing production over the past few years. A similar effect can be seen unfolding in international markets, where some areas have not seen significant investment in many years. As we have observed previously, we expect this unusually long period of industry-wide underinvestment in new exploration initiatives, together with access to enhanced recording technologies, to result in a rush to replace depleting reserves globally.

I am very proud of all SAE employees, who have spent the past couple of years making the tough choices to position the Company for future success, especially during a very difficult period when many service providers were making decisions to boost near-term results at the expense of longer-term objectives. Even with the inherent lumpiness in our periodic revenue, we are optimistic that 2019 could be a markedly improved year overall.

We expect to see most of the large working capital build related to the ramp up in activity we experienced during the first quarter to return to our cash balance by the end of the second quarter. This cash generation, combined with the remaining $8 million of available borrowing capacity under our senior credit facility, subject to lender approval, should be sufficient to repay our $7 million principal amount of senior notes due in September, plus cover working capital requirements for new projects this year. While visibility into the second half of the year is still constrained beyond the projects currently in backlog, we are comfortable that our current liquidity and related near-term expectations will be sufficient to continue to position SAE for future success.

What We’re Seeing From The Stock 

One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to SAExploration, the news proved to be overwhelmingly positive.

Not only did the company beat all expectations and show incredible growth on everything from revenue to earnings and more, the company continues to expand its contractual backlog and bids. So, it’s not surprising to see that excited investors are pushing the stock on a run for the top.

As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:46), SAEX is trading at $3.99 per share after a gain of $0.054 per share or 15.65% thus far today.

Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!

What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on SAEX. In particular, we’re interested in following the company’s growth as it continues to expand its contractual backlog and place more bids. Nonetheless, we’ll keep a close eye on the story and bring the news to you as it breaks!

Never Miss The News Again

Do you want real-time, actionable news delivered to your inbox? Join the CNA Finance mailing list below!

Subscribe Today!

* indicates required

Leave a Comment