EX-99.1 2 a06-13208_1ex99d1.htm EX-99

Exhibit 99.1

 

 

VERITAS DGC INC.  ANNOUNCES

THIRD FISCAL QUARTER RESULTS

 

Houston –  June 6, 2006 – Veritas (NYSE: VTS) today announced its financial results for the third fiscal quarter and nine months ended April 30, 2006. Revenue and earnings for the third fiscal quarter and nine months ended April 30, 2006 with the comparative amounts for the corresponding periods of the prior fiscal year were as follows:

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

April 30,

 

April 30,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

(millions, except per share amounts)

 

Revenue

 

$

236.2

 

$

175.5

 

$

643.8

 

$

497.3

 

Net income

 

32.9

 

18.4

 

75.7

 

36.8

 

Diluted earnings per share

 

0.84

 

0.52

 

1.95

 

1.05

 

 

Veritas Chairman and CEO Thierry Pilenko commented, “I am pleased to report another excellent quarter for Veritas. Revenue grew 35% and operating margin was up 66% year-on-year as strong market conditions and increased exploration spending fueled growth across all of our product lines. Our commitment to a balanced multi-client / contract strategy delivered particularly strong results this quarter with data library sales up 86% year-on-year. 

 

We are continuing to see increased interest around our enhanced subsurface illumination and reservoir delineation capabilities through innovative techniques such as wide-azimuth marine acquisition and advanced imaging technologies.

 

Looking forward, within the current global economic environment, we expect these robust seismic market conditions to extend well into 2007.”

 


 

Revenue for the third quarter and nine months ended April 30 follows:

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

April 30,

 

April 30,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

(millions)

 

Multi-client:

 

 

 

 

 

 

 

 

 

Land

 

$

12.7

 

$

10.3

 

$

85.7

 

$

36.3

 

Marine

 

76.1

 

37.3

 

200.7

 

144.1

 

Subtotal

 

88.8

 

47.6

 

286.4

 

180.4

 

Contract:

 

 

 

 

 

 

 

 

 

Land

 

75.2

 

57.0

 

156.4

 

134.0

 

Marine

 

72.2

 

70.9

 

201

 

182.9

 

Subtotal

 

147.4

 

127.9

 

357.4

 

316.9

 

Total Revenue

 

$

236.2

 

$

175.5

 

$

643.8

 

$

497.3

 

 

 

 

 

 

 

 

 

 

 

Revenue by segment:

 

 

 

 

 

 

 

 

 

North and South America (NASA)

 

$

172.60

 

$

111.00

 

$

445.60

 

$

318.50

 

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

 

31.2

 

30.6

 

99.7

 

95.5

 

Asia Pacific (APAC)

 

27.4

 

29.4

 

83.9

 

71.5

 

Veritas Hampson-Russell (VHR)

 

5.0

 

4.5

 

14.6

 

11.8

 

Total Revenue

 

$

236.2

 

$

175.5

 

$

643.8

 

$

497.3

 

 

Multi-client

 

Multi-client revenue in the third quarter of fiscal 2006 of $88.8 million increased $41.2 million, or 86%, compared to the prior year’s third fiscal quarter. Increased revenues were driven by continued strengthening of interest in the Gulf of Mexico and especially strong marine data library sales in Brazil.

 

Contract

 

Contract revenue in the third quarter of fiscal 2006 of $147.4 million increased $19.5 million, or 15%, from the prior year’s third fiscal quarter. While market conditions continue to improve and strengthen our business worldwide, we saw much of the increase in this fiscal quarter from land acquisition work in Canada and Alaska as well as increased processing revenue across all geographic divisions.  Marine acquisition revenue remained strong considering the prior year third quarter results included a significant wide azimuth project in the Gulf of Mexico.

 

Operating Income

 

Operating income of $48.6 million increased $19.4 million, or 66%, compared to the prior year’s third fiscal quarter primarily due to improved revenue and pricing in both our multi-client and contract business. The strongest areas were in land acquisition and processing work.  Operating margin as a percent of revenue increased from 17% in the prior year’s third fiscal quarter to 21% in the current year’s third fiscal quarter.

 

General and administrative expenses of $11.1 million increased $2.5 million from the prior year’s third 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 $0.9 million from the prior year’s third 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 third fiscal quarter due to higher interest rates and a higher cash balance.

 


 

Income Taxes

 

The Company’s effective tax rate for the quarter ended April 30, 2006 was 33.2%, slightly lower than the 35% U.S. statutory rate.  The Company currently expects the effective tax rate for the full year fiscal 2006 to be approximately 39%.

 

Backlog

 

The Company’s backlog continued to be near record levels at $460 million on April 30, 2006, compared to our all time high of $474 million at January 31, 2006 and $234 million at April 30, 2005.

 

Balance Sheet

 

The Company ended the third quarter with approximately $378.2 million in cash compared to $249.4 at July 31, 2005.  We also have $155.0 million in convertible debt, which remains classified as a current liability because the stock price has remained above the level that triggers the convertibility features of the debt.

 

Investment in the multi-client library, net of depreciation, was $25.6 million for the third fiscal quarter compared to $18.7 million in the prior year’s third fiscal quarter.  Our multi-client library balance was $272.2 million at April 30, 2006.

 

Conference Call

 

The Company’s customary conference is scheduled for tomorrow, June 7th at 8 a.m. central time.  Following the brief quarterly review 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 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 Wednesday, June 21, 2006.  Interested persons can phone 800-642-1687 or 706-645-9291 (pin code 2724096#).

 

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
April 30,

 

Nine Months Ended
April 30,

 

 

 

2006

 

2005

 

2006

 

2005

 

Revenue

 

$

236,219

 

$

175,510

 

$

643,757

 

$

497,319

 

Cost of services

 

171,022

 

132,957

 

475,611

 

393,898

 

Research and development

 

5,504

 

4,676

 

16,221

 

13,790

 

General and administrative

 

11,082

 

8,632

 

31,481

 

23,597

 

Operating income

 

48,611

 

29,245

 

120,444

 

66,034

 

Interest expense

 

2,002

 

1,140

 

5,128

 

2,803

 

Interest income

 

(3,302

)

(1,553

)

(7,629

)

(3,080

)

Gain on involuntary conversion of assets

 

—

 

—

 

(2,000

)

—

 

Other expense (income), net

 

711

 

(901

)

66

 

(963

)

Income before provision for income taxes

 

49,200

 

30,559

 

124,879

 

67,274

 

Income taxes

 

16,324

 

12,152

 

49,135

 

30,521

 

Net income

 

$

32,876

 

$

18,407

 

$

75,744

 

$

36,753

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Net income per common share

 

$

.92

 

$

.54

 

$

2.16

 

$

1.09

 

Weighted average common shares

 

35,555

 

33,792

 

35,091

 

33,775

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

Net income per common share

 

$

.84

 

$

.52

 

$

1.95

 

$

1.05

 

Weighted average common shares

 

39,194

 

35,131

 

38,833

 

34,970

 

 

 

 

 

 

 

 

 

 

 

Supplemental Data:

 

 

 

 

 

 

 

 

 

Cash Flow Data:

 

 

 

 

 

 

 

 

 

Depreciation and non-multi-client amortization, net

 

$

12,166

 

$

10,969

 

$

35,264

 

$

33,164

 

Multi-client amortization

 

49,280

 

19,156

 

157,642

 

103,559

 

Multi-client expenditures, net cash

 

25,569

 

18,662

 

101,426

 

77,558

 

Capital expenditures

 

18,896

 

26,381

 

47,523

 

43,533

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data (at period end):

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

$

378,228

 

$

238,453

 

Debt(1)

 

 

 

 

 

155,000

 

155,000

 

Multi-client data library

 

 

 

 

 

272,183

 

293,228

 

Total shareholders’ equity

 

 

 

 

 

701,286

 

535,483

 

 

(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.