EX-99.1 2 a06-6532_1ex99d1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

VERITAS DGC INC. ANNOUNCES

SECOND FISCAL QUARTER RESULTS

 

Houston, March 8, 2006 – Veritas DGC Inc. (NYSE: VTS) (TSX: VTS) today announced its financial results for the second fiscal quarter and six months ended January 31, 2006. Revenue and earnings for the second fiscal quarter and six months ended January 31, 2006 with the comparative amounts for the corresponding periods of the prior fiscal year were as follows:

 

 

 

Three Months Ended
January 31,

 

Six Months Ended
January 31,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

(millions, except per share amounts)

 

Revenue 

 

$

238.9

 

$

192.2

 

$

407.5

 

$

321.8

 

Net income

 

31.1

 

17.4

 

42.9

 

18.3

 

Diluted earnings per share

 

0.81

 

0.51

 

1.12

 

0.53

 

 

Chairman and CEO Thierry Pilenko commented, “Increasing exploration activity combined with our typically strong second quarter provided the foundation for Veritas to achieve all-time quarterly records for revenue, pre-tax income and backlog. Our recent vintage multi-client seismic data continued to perform exceptionally well as our customers increasingly turn their interest to accessing the latest available information and technology in key basins of interest.

 

Sustained reserves replacement concerns combined with strong worldwide demand for hydrocarbons is continuing to fuel a resurgence in exploration activity. This is creating robust market conditions for seismic information and services and extending our visibility well into fiscal year 2007.”

 


 

Revenue for the second quarter and six months ended January 31 follows:

 

 

 

Three Months Ended 
January 31,

 

Six Months Ended
January 31,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

(millions)

 

Multi-client: 

 

 

 

 

 

 

 

 

 

Land

 

$

47.1

 

$

15.2

 

$

73.0

 

$

26.0

 

Marine

 

76.0

 

72.5

 

124.5

 

106.7

 

Subtotal

 

123.1

 

87.7

 

197.5

 

132.7

 

 

 

 

 

 

 

 

 

 

 

Contract:

 

 

 

 

 

 

 

 

 

Land

 

33.6

 

40.4

 

81.2

 

77.0

 

Marine

 

82.2

 

64.1

 

128.8

 

112.1

 

Subtotal

 

115.8

 

104.5

 

210.0

 

189.1

 

Total Revenue

 

$

238.9

 

$

192.2

 

$

407.5

 

$

321.8

 

 

 

 

 

 

 

 

 

 

 

Revenues by segment:

 

 

 

 

 

 

 

 

 

North and South America (NASA)

 

$

170.2

 

$

130.8

 

$

272.9

 

$

207.5

 

Europe, Africa, Middle East, and CIS (EAME)

 

33.7

 

33.1

 

68.5

 

64.9

 

Asia Pacific (APAC)

 

29.7

 

24.0

 

56.5

 

42.0

 

Veritas Hampson Russell (VHR)

 

5.3

 

4.3

 

9.6

 

7.4

 

Total Revenue

 

$

238.9

 

$

192.2

 

$

407.5

 

$

321.8

 

 

Multi-client

 

Multi-client revenue in the second quarter of fiscal 2006 of $123.1 million increased $35.4 million, or 40%, compared to the prior year’s second fiscal quarter. Both land and marine library improved based on especially strong seismic survey sales in Canada and the Gulf of Mexico.

 

Contract

 

Contract revenue in the second quarter of fiscal 2006 increased by $11.3 million, or 11%, from the prior year’s second fiscal quarter as a result of robust marine activity in the North Sea and Asia Pacific. Revenue growth was partially offset by lower land contract revenue due to project delays as a result of unusually mild winter weather conditions in Canada.

 

Operating Income

 

Operating income increased $19.9 million, or 59%, compared to the prior year’s second fiscal quarter due to increased revenue in both multi-client and contract work and increased margins primarily in multi-client work. This performance was driven by a favorable sales mix of multi-client revenue especially in Canada and the Gulf of Mexico.

 

General and administrative expenses increased $2.9 million from the prior year’s second fiscal quarter primarily due to share-based employee compensation expense resulting from the adoption of new accounting rules, severance costs and increased provision for performance-based incentive compensation.

 

Other Items

 

Interest expense increased by $0.7 million from the prior year’s second fiscal quarter as a result of increases in the interest rate on the $155.0 million convertible debt. Interest income increased approximately $1.7 million compared to the prior year’s second fiscal quarter due to higher interest rates

 


 

and a higher cash balance.

 

Income Taxes

 

The Company’s effective tax rate for the quarter ended January 31, 2006 was 43%, higher than the 35% U.S. statutory rate. Substantially all of the higher tax rate was attributable to non-U.S. activities. The Company currently expects the effective tax rate for the full year fiscal 2006 to be approximately 42%.

 

Backlog

 

The Company’s backlog increased to an all time record of $474 million at January 31, 2006 from $459 million at October 31, 2005 and $300 million at January 31, 2005.

 

Balance Sheet

 

The Company ended the second quarter with approximately $263.5 million in cash and $155.0 million in convertible debt. The debt of $155.0 million remains classified as a current liability because the stock price has remained above the level that triggers the convertibility features of the debt.

 

Net investment in the multi-client library was $14.2 million for the second fiscal quarter compared to $23.3 million in the prior year’s second fiscal quarter. Our balanced multi-client/contract strategy remains unchanged for FY 2006 with a total planned multi-client investment of approximately $155-165 million for fiscal year 2006. The multi-client library balance was $292.7 million at January 31, 2006.

 

Conference Call

 

The Company’s customary conference is scheduled for tomorrow, March 9th, at 8 a.m. central time. Following a brief presentation, participants will have the opportunity to ask questions. The dial in number to participate is 800-374-0113 or 706-758-9607.

 

A live webcast of the conference call with the related slide presentation will be available on the Company’s website, www.veritasdgc.com. Windows Media Player software is required and is available, free of charge, for download through the website. Individuals accessing the webcast will have “listen only” status and will be unable to take part in the Q&A session.

 

A digital replay will be available shortly after the conclusion of the call until the close of business Thursday, March 23, 2006. Interested persons can phone 800-642-1687 or 706-645-9291 (pin code 2723925#).

 

The Company cautions that statements in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements as to expectations, beliefs and future financial performance, such as statements regarding our business prospects. All of these are based on current information and expectations that are subject to a number of risks, uncertainties and assumptions. These risks and uncertainties are more fully described in our reports filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material respect from those currently anticipated.

 

Veritas DGC Inc., headquartered in Houston, Texas, is a leading provider of integrated geophysical information and services to the petroleum industry worldwide.

 

For additional information, please contact:

 

Mindy Ingle, Investor Relations

(832) 351-8821

 


 

Veritas DGC Inc. and Subsidiaries

 

Consolidated Statements of Operations (Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended
January 31,

 

Six Months Ended
January 31,

 

 

 

2006

 

2005

 

2006

 

2005

 

Revenue

 

$

238,860

 

$

192,228

 

$

407,538

 

$

321,809

 

Cost of services

 

167,923

 

144,950

 

304,589

 

260,952

 

Research and development

 

5,815

 

5,020

 

10,717

 

9,114

 

General and administrative

 

11,544

 

8,595

 

20,399

 

14,954

 

Operating income

 

53,578

 

33,663

 

71,833

 

36,789

 

Interest expense

 

1,650

 

906

 

3,126

 

1,663

 

Interest income

 

(2,426

)

(708

)

(4,327

)

(1,527

)

Gain on involuntary conversion of assets

 

—

 

—

 

(2,000

)

—

 

Other (income), net

 

(520

)

(303

)

(645

)

(62

)

Income before provision for income taxes

 

54,874

 

33,768

 

75,679

 

36,715

 

Income taxes

 

23,792

 

16,400

 

32,811

 

18,369

 

Net income

 

$

31,082

 

$

17,368

 

$

42,868

 

$

18,346

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Net income per common share

 

$

0.89

 

$

0.51

 

$

1.23

 

$

0.54

 

Weighted average common shares

 

35,045

 

33,783

 

34,867

 

33,767

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

Net income per common share

 

$

0.81

 

$

0.51

 

$

1.12

 

$

0.53

 

Weighted average common shares

 

38,494

 

34,318

 

38,384

 

34,323

 

 

Supplemental Data:

 

 

 

 

 

 

 

 

 

Cash Flow Data:

 

 

 

 

 

 

 

 

 

Depreciation and amortization, net

 

$

14,053

 

$

12,431

 

$

23,098

 

$

22,195

 

Multi-client amortization

 

55,522

 

48,131

 

108,362

 

84,403

 

Multi-client expenditures, net cash

 

14,235

 

23,271

 

75,857

 

58,896

 

Capital expenditures

 

17,176

 

9,858

 

28,627

 

17,152

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data (at period end):

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

$

263,468

 

$

205,230

 

Debt (1)

 

 

 

 

 

155,000

 

155,000

 

 

 

 

 

 

 

 

 

 

 

Multi-client data library

 

 

 

 

 

292,720

 

295,700

 

Total shareholders equity

 

 

 

 

 

654,622

 

517,375

 

 

(1) The debt of $155 million has been classified as a current liability since October 31, 2005 because the stock price has remained above the level that triggers the convertibility features of the debt.