8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3, 2018

 

 

SAExploration Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

(State or other jurisdiction of incorporation)

001-35471

(Commission file number)

27-4867100

(IRS Employer Identification No.)

1160 Dairy Ashford Rd., Suite 160, Houston, Texas 77079

(Address of principal executive offices) (Zip Code)

(281) 258-4400

(Company’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14(d)-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On August 8, 2018, SAExploration Holdings, Inc. (the “Company”) issued a press release reporting its consolidated financial results for the second quarter ended June 30, 2018.

A copy of the press release is being furnished as an exhibit to this Current Report and incorporated by reference into this Item 2.02. The information set forth in this Item 2.02, including Exhibit 99.2 attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

Item 8.01. Other Events

On August 3, 2018, the Company issued a press release announcing that it plans to publicly release its consolidated financial results for the second quarter ended June 30, 2018, on Wednesday, August 8, 2018, after the close of trading. In addition, the Company announced that an investors’ conference call to review these results will be held on Thursday, August 9, 2018 at 10:00 a.m. Eastern Time.

On August 8, 2018, the Company posted an Investor Update to its website, www.saexploration.com.

The information in this Item 8.01, including Exhibit 99.1 and Exhibit 99.3 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Item 8.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

CAUTIONARY NOTE REGARDING FORWARD–LOOKING STATEMENTS

This report contains “forward–looking statements” within the meaning of the U.S. federal securities laws, with respect to the Company’s financial condition, results of operations, cash flows and business, and expectations or beliefs concerning future events. These forward–looking statements can generally be identified by phrases such as “expects,” “anticipates,” “believes,” “estimates,” “intends,” “plans to,” “ought,” “could,” “will,” “should,” “likely,” “appears,” “projects,” “forecasts,” “outlook” or other similar words or phrases. There are inherent risks and uncertainties in any forward–looking statements. Although the Company believes that its expectations are reasonable, it can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Except as required by law, the Company undertakes no obligation to update, amend or clarify any forward–looking statements to reflect events, new information or otherwise. Some of the important factors that could cause actual results to differ materially from the Company’s expectations are discussed below. All written and oral forward–looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements.

You should refer to the risk factors from the Company’s Annual Report on Form 10–K filed on March 16, 2018, for the fiscal year ended December 31, 2017, as updated in the Company’s Quarterly Report on Form 10–Q filed on May 15, 2018, for the period ended March 31, 2018, and as updated in the Company’s Quarterly Report on Form 10–Q filed on August 8, 2018, for the period ended June 30, 2018, for specific risks which would cause actual results to be significantly different from those expressed or implied by any of the Company’s forward–looking statements. It is not possible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties, the forward–looking events and circumstances discussed in this report may not occur and actual results could differ materially from those anticipated or implied in the forward–looking statements. Accordingly, readers of this report are cautioned not to place undue reliance on the forward–looking statements.

 

1


Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

 

99.1    Press Release dated August 3, 2018
99.2    Press Release dated August 8, 2018
99.3    Investor Update

 

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 8, 2018     SAExploration Holdings, Inc.
    By:  

/s/ Brent Whiteley

    Name:   Brent Whiteley
    Title:   Chief Financial Officer, General Counsel and Secretary

 

3

EX-99.1

 

LOGO

  

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

SAEXPLORATION ANNOUNCES SECOND QUARTER 2018 EARNINGS RELEASE AND CONFERENCE CALL SCHEDULE

August 3, 2018 – HOUSTON, TX – SAExploration Holdings, Inc. (NASDAQ: SAEX, OTCQB: SXPLW) today announced plans to release its unaudited consolidated financial results for the second quarter ended June 30, 2018 on Wednesday, August 8, 2018 after close of trading. SAE has scheduled a conference call for Thursday, August 9, 2018 at 10:00 a.m. ET to discuss these results. On this call, SAE will also provide a comprehensive update on its acquisition of Geokinetics’ assets and other related matters.

 

SAExploration Holdings, Inc. Q2 2018 Earnings Call

Date:

  

Thursday, August 9, 2018

Time:

  

10:00 a.m. ET (9:00 a.m. CT)

Phone:

  

(855) 433-0934 (Toll-Free) or (484) 756-4291 (Toll)

Webcast:

  

https://edge.media-server.com/m6/p/rhruq4xx

In addition to the audio portion of the conference call, SAE Management will be conducting an Investor Presentation, which can be accessed live during the conference call by registering at https://edge.media-server.com/m6/p/rhruq4xx. To listen to the call and follow the presentation live, please go to website at least 15 minutes early to register and download any necessary audio software. The investor presentation will also be available on the Investors section of SAE’s website at www.saexploration.com following the conference call.

About SAExploration Holdings, Inc.

SAE is an internationally-focused oilfield services company offering a full range of vertically-integrated seismic data acquisition and logistical support services in remote and complex environments throughout Alaska, Canada, South America, Southeast Asia and West Africa. In addition to the acquisition of 2D, 3D, time-lapse 4D and multi-component seismic data on land, in transition zones and offshore in depths reaching 3,000 meters, SAE offers a full suite of logistical support and in-field data processing services, such as program design, planning and permitting, camp services and infrastructure, surveying, drilling, environmental assessment and reclamation and community relations. SAE operates crews around the world, performing major projects for its blue-chip customer base, which includes major integrated oil companies, national oil companies and large independent oil and gas exploration companies. Operations are supported through a multi-national presence in Houston, Alaska, Canada, Peru, Colombia, Bolivia, Brazil and New Zealand. For more information, please visit SAE’s website at www.saexploration.com.

The information in SAE’s website is not, and shall not be deemed to be, a part of this notice or incorporated in filings SAE makes with the Securities and Exchange Commission.

 

Safety. Acquisition. Experience

   saexploration.com


Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of the U.S. federal securities laws with respect to SAE. These statements can be identified by the use of words or phrases such as “expects,” “estimates,” “projects,” “budgets,” “forecasts,” “anticipates,” “intends,” “plans,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions. These forward-looking statements include statements regarding SAE’s financial condition, results of operations and business and SAE’s expectations or beliefs concerning future periods and possible future events. These statements are subject to significant known and unknown risks and uncertainties that could cause actual results to differ materially from those stated in, and implied by, this press release. Risks and uncertainties that could cause actual results to vary materially from SAE’s expectations are described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in SAE’s filings with the Securities and Exchange Commission. Except as required by applicable law, SAE is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

Contact

SAExploration Holdings, Inc.

Ryan Abney

Vice President, Finance

(281) 258-4400

rabney@saexploration.com

 

Safety. Acquisition. Experience

   saexploration.com
EX-99.2

Exhibit 99.2

FOR IMMEDIATE RELEASE

 

LOGO

SAEXPLORATION ANNOUNCES SECOND QUARTER 2018 UNAUDITED CONSOLIDATED FINANCIAL RESULTS

August 8, 2018 – Houston, TX – SAExploration Holdings, Inc. (NASDAQ: SAEX, OTCQB: SXPLW) today announced its financial results for the second quarter of 2018.

Second Quarter 2018 Summary and Recent Developments

 

   

Revenue of $16.9 million, compared to $13.6 million in Q2 2017

 

   

Gross loss of $5.1 million, or -30.3% of revenues, compared to $1.0 million, or -7.5% of revenues, in Q2 2017

 

   

Adjusted gross (loss) profit, a non-GAAP measure, of $(2.8) million, or -16.7% of revenues, compared to $1.9 million, or 14.2% of revenues, in Q2 2017

 

   

Net loss attributable to SAExploration of $33.4 million, compared to $17.9 million in Q2 2017

 

   

Adjusted EBITDA, a non-GAAP measure, of $(7.6) million, compared to $(3.8) million in Q2 2017

 

   

Pro forma contracted backlog, including the effects of the Geoknetics acquisition, of $80.0 million through 2019 and $491.8 million of bids outstanding as of June 30, 2018

 

   

Subsequent to June 30, 2018, acquired substantially all of the assets of Geokinetics in a transformative and accretive transaction for $19.4 million

 

   

Initiated a comprehensive strategy to recapitalize balance sheet and improve liquidity through series of transactions, including upsizing credit facility to $30.0 million, repaying $1.9 million of stub notes, and converting 8% Series A preferred stock into common stock and warrants

 

   

Began process to simplify capital structure further and meaningfully reduce interest expense through an anticipated private placement of $50.0 million 6% convertible notes due 2023 with proceeds to be used to repay certain existing credit facilities and provide working capital

Jeff Hastings, Chairman and CEO of SAE, commented, “The second quarter was a very transformative period for our company. While activity in many of our markets remained historically low, we chose this time to focus on our positioning within the industry and bringing our capital structure to a level that will substantially improve our competitiveness as market conditions begin to improve. In an effort to increase our overall exposure to new activity and expedite our return to growth, we embarked on a transformative transaction where we acquired substantially all of the assets of Geokinetics. Perhaps more importantly, the valuation at which these assets were acquired creates meaningful upside on multiple levels, in both the near-term and in the long-run. Our rationale for this acquisition centered on three objectives: capture equipment synergies through a reduction in rental expense, gain immediate access to new and complementary markets, and add new service capabilities to increase value to our customers.”

 

 

Safety. Acquisition. Experience    saexploration.com


Mr. Hastings continued, “Since 2006, we have pioneered an asset-light model to great benefit. However, this approach also sacrificed cash generation as a result of higher rental costs. In this prolonged market downturn and at current pricing levels, we can no longer afford to exchange cash generation for flexibility with capital expenditures. Additionally, our potential cash generation in the future when growth in activity returns will be positively affected by eliminating the need to most often rent equipment. This strategic transaction also broadens our geographic reach and positions us to efficiently pursue and capitalize on new opportunities. As illustrated by the immediate improvement in our contracted backlog, we expect having access to unconventional resource plays in the Lower 48 will diversify our historically conventional-focused, internationally-leveraged footprint and present new markets. We are also excited to gain the data processing software and capabilities that Geokinetics has spent years developing. In addition to data processing as a stand-alone service, we believe we have an advantage in being able to offer incremental value to our customers by extending our proven single-provider approach offering start-to-finish in-house logistics and data acquisition capabilities to include data processing and interpretation services utilizing cutting edge software and expertise.”

Mr. Hastings concluded, “We also recently initiated certain interrelated transactions to simplify our capital structure, improve liquidity and reduce interest expense, so that we are appropriately positioned to maximize stockholder value once we are able to fully realize the expected benefits from the Geokinetics acquisition. The conversion of our Series A Preferred Stock will simplify our equity structure and eliminate the dividend payable that was accruing at an 8% rate annually. Additionally, the new $50 million convertible notes we hope to issue will allow us to repay certain credit facilities with new 6% paper with a longer-term maturity in 2023. While currently subject to legal challenges, the State of Alaska has authorized issuing bonds to repurchase outstanding Tax Credits. As a result, over the next eighteen months, or possibly earlier, we hope to be in a position where our net debt is below $60 million. We believe this strategic acquisition and the related capital structure transactions, along with the continued support of our employees and key stakeholders, will enable us to achieve our goal of leveraging SAE’s best-in-class operational history to become the market leader in onshore data acquisition and processing services worldwide.”

Second Quarter 2018 Results

SAE reported revenues of $16.9 million for the second quarter of 2018, a 54.5% decrease from the first quarter of 2018 but a 24.5% increase from the second quarter of 2017. The decrease from the first quarter of 2018 was due to less projects in North America offset by an increase in projects in Colombia. The increase from the second quarter of 2017 was due to more projects in North America and Colombia offset by no projects in Bolivia and New Zealand.

SAE reported adjusted gross loss of $2.8 million for the second quarter of 2018 compared with adjusted gross profit of $11.1 million for the first quarter of 2018 and adjusted gross profit of $1.9 million for the second quarter of 2017. Adjusted EBITDA was $(7.6) million for the second quarter of 2018 compared with $6.0 million for the first quarter of 2018 and $(3.8) million for the second quarter of 2017. Both adjusted gross loss and adjusted EBITDA in the second quarter of 2018 were negatively impacted by less favorable pricing when taking into account the fixed costs involved in our projects. Adjusted gross (loss) profit and adjusted EBITDA are non–GAAP financial measures and are described in the attached tables under “Non–GAAP Measures.”

For the second quarter of 2018, SAE reported a net loss of $33.3 million, or $2.24 basic and diluted loss per share, compared with a net loss of $1.5 million, or $3.79 basic and diluted loss per share for the first quarter of 2018. For the second quarter of 2017, SAE reported a net loss of $17.8 million, or $1.91 basic and diluted loss per share.

 

Safety. Acquisition. Experience    saexploration.com


During the second quarter of 2018, SAE recorded a provision for doubtful accounts in the amount of $19.0 million related to its long-term $78.1 million account receivable with a customer in Alaska. Based on assumptions made regarding the State of Alaska’s ability to issue bonds to repurchase outstanding Tax Credits, the length of time until the bonds could be issued, the data that SAE expects it wants to remain confidential, and the likelihood of a discounted adjustment on its one remaining pending Tax Credit application, SAE determined that it is reasonable to estimate that it will receive approximately $56.5 million in proceeds from the State of Alaska’s issuance of bonds. Additionally, SAE believes it will be successful in its ability to monetize approximately $2.7 million of existing Tax Credits in the secondary market at a small discount to face value. Please refer to Note 3 to the Unaudited Consolidated Financial Statements, along with additional disclosures included in SAE’s Form 10-Q filed for the period ended June 30, 2018 for additional details.

As of June 30, 2018, cash and cash equivalents totaled $4.5 million, working capital was $2.0 million, total debt at face value, excluding net unamortized premiums or discounts, was $57.8 million, and total stockholders’ equity was $10.2 million.

Capital expenditures for the second quarter of 2018 were $0.6 million compared to $0.1 million in the second quarter of 2017. The low level of capital expenditures in both periods was primarily due to the continuation of unfavorable conditions in the oil and natural gas industry.

As of June 30, 2018, and including the effects of the Geokinetics asset acquisition completed after the end of the quarter, SAE’s pro forma backlog was $80.0 million and bids outstanding totaled $491.8 million. Approximately 96% of the backlog is comprised of data acquisition projects and the remainder is comprised of data processing projects. Additionally, approximately 96% of the data acquisition projects are located in North America, split primarily between Alaska and the Lower 48. SAE currently expects to complete approximately 40% of the projects in its pro forma backlog as of June 30, 2018 during the remainder of 2018, with the remainder scheduled to be performed during 2019. The estimations of realization from our backlog can be impacted by a number of factors, however, including deteriorating industry conditions, customer delays or cancellations, permitting or project delays and environmental conditions.

Investor Conference Call

SAE will host a conference call on Thursday, August 9, 2018 at 10:00 a.m. Eastern Time to discuss its unaudited consolidated financial results for the second quarter ended June 30, 2018. During this call, SAE will also provide a comprehensive update on its acquisition of Geokinetics’ assets and other related matters. Participants can access the conference call by dialing (855) 433-0934 (toll-free) or (484) 756-4291 (international). In addition to the audio portion of the call, SAE Management will be conducting an investor presentation, which can be accessed live during the conference call by registering at https://edge.media-server.com/m6/p/rhruq4xx.

To listen to the call and follow the presentation live, please go to the website at least 15 minutes early to register and download any necessary audio software. The investor presentation and a replay of the webcast for the conference call will be archived on the company’s website and can be accessed by visiting the Investors section of SAE’s website at www.saexploration.com.

About SAExploration Holdings, Inc.

SAE is an internationally–focused oilfield services company offering a full range of vertically–integrated seismic data acquisition and logistical support services in North America, South America, West Africa and Southeast Asia to the oil and natural gas industry. Our services include the acquisition of 2D, 3D, time–lapse 4D and multi–component seismic data on land, in transition zones between land and water, and offshore in depths reaching 3,000 meters. In addition, SAE offers a full suite of logistical support and in–field data processing services, such as program design, planning and permitting, camp services and infrastructure,

 

Safety. Acquisition. Experience    saexploration.com


surveying, drilling, environmental assessment and reclamation and community relations. SAE operates crews around the world, performing major projects for its blue–chip customer base, which includes major integrated oil companies, national oil companies and large independent oil and natural gas exploration companies. Operations are supported through a multi–national presence in Houston, Alaska, Canada, Peru, Colombia, Bolivia, Brazil and New Zealand. For more information, please visit SAE’s website at www.saexploration.com.

The information in SAE’s website is not, and shall not be deemed to be, a part of this notice or incorporated in filings SAE makes with the Securities and Exchange Commission.

Forward–Looking Statements

This press release contains certain “forward–looking statements” within the meaning of the U.S. federal securities laws with respect to SAE. These statements can be identified by the use of words or phrases such as “expects,” “estimates,” “projects,” “budgets,” “forecasts,” “anticipates,” “intends,” “plans,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions. These forward–looking statements include statements regarding SAE’s financial condition, results of operations and business and SAE’s expectations or beliefs concerning future periods and possible future events. These statements are subject to significant known and unknown risks and uncertainties that could cause actual results to differ materially from those stated in, and implied by, this press release. Risks and uncertainties that could cause actual results to vary materially from SAE’s expectations are described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in SAE’s filings with the Securities and Exchange Commission. Except as required by applicable law, SAE is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.    

Contact

SAExploration Holdings, Inc.

Ryan Abney

Vice President, Finance

(281) 258-4400

rabney@saexploration.com

 

Safety. Acquisition. Experience    saexploration.com


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

Revenue from services

   $ 16,883     $ 13,559     $ 54,006     $ 99,728  

Cost of services

     19,710       11,629       45,715       69,403  

Depreciation and amortization expense

     2,295       2,947       4,716       6,198  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross (loss) profit

     (5,122     (1,017     3,575       24,127  

Selling, general and administrative expenses

     25,763       6,358       32,140       12,875  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (30,885     (7,375     (28,565     11,252  

Other (expense) income, net:

        

Interest expense, net

     (2,346     (8,561     (5,487     (16,919

Foreign exchange loss, net

     (2,005     (1,347     (2,179     (1,036

Other income (expense), net

     9       (72     154       (85
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     (4,342     (9,980     (7,512     (18,040

Loss before income taxes

     (35,227     (17,355     (36,077     (6,788

Income taxes

     (1,881     485       (1,257     2,225  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (33,346     (17,840     (34,820     (9,013

Less: net income attributable to noncontrolling interest

     59       65       894       2,047  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to SAExploration

   $ (33,405   $ (17,905   $ (35,714   $ (11,060
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted loss per common share

   $ (2.24   $ (1.91   $ (6.46   $ (1.18
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding (basic and diluted)

     14,981       9,359       12,830       9,359  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Safety. Acquisition. Experience    saexploration.com


CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except number of shares)

 

     June 30,
2018
    December 31,
2017
 
     (Unaudited)        
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 4,525     $ 3,613  

Restricted cash

     16       41  

Accounts receivable, net of allowance for doubtful accounts of $145 and $12, respectively

     12,564       6,105  

Deferred costs on contracts

     489       2,107  

Prepaid expenses and other current assets

     4,542       6,395  
  

 

 

   

 

 

 

Total current assets

     22,136       18,261  

Property and equipment, net of accumulated depreciation of $76,428 and $72,649, respectively

     28,783       32,946  

Goodwill

     1,751       1,832  

Intangible assets, net of accumulated amortization of $781 and $732, respectively

     593       671  

Long–term accounts receivable, net of allowance of $18,985 and $0, respectively

     59,117       78,102  

Deferred income taxes

     4,949       4,592  

Other assets

     3,855       5,534  
  

 

 

   

 

 

 

Total assets

   $ 121,184     $ 141,938  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY             

Current liabilities:

    

Accounts payable

   $ 7,432     $ 4,551  

Accrued liabilities

     7,444       6,311  

Income and other taxes payable

     5,268       7,887  

Current portion of long–term debt

     —         995  

Deferred revenue

     —         1,477  
  

 

 

   

 

 

 

Total current liabilities

     20,144       21,221  

Long–term debt, net

     57,425       120,298  

Other long–term liabilities

     623       608  

Commitments and contingencies

    

Mezzanine equity – Series A preferred stock, 32, 788 shares outstanding

     32,788    

Stockholders’ equity:

    

Common stock, 15,231,852 and 9,424,334 shares outstanding, respectively

     2       1  

Additional paid-in capital

     177,021       133,741  

Accumulated deficit

     (168,726     (133,306

Accumulated other comprehensive loss

     (3,269     (5,082

Treasury stock, at cost, 363,361 and 38,024 shares outstanding, respectively

     (288     (113
  

 

 

   

 

 

 

Total stockholders’ equity attributable to SAExploration

     4,740       (4,759

Noncontrolling interest

     5,464       4,570  
  

 

 

   

 

 

 

Total stockholders’ equity

     10,204       (189
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 121,184     $ 141,938  
  

 

 

   

 

 

 

 

Safety. Acquisition. Experience    saexploration.com


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

Net loss

   $ (33,436   $ (17,840   $ (34,820   $ (9,013

Other comprehensive loss:

        

Foreign currency translation adjustment

     1,225       (7     1,813       (72
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss

     (32,121     (17,847     (33,007     (9,085

Less: comprehensive income attributable to noncontrolling interest

     59       65       894       2,047  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss attributable to SAExploration

   $ (32,180   $ (17,912   $ (33,901   $ (11,132
  

 

 

   

 

 

   

 

 

   

 

 

 

REVENUE FROM SERVICES BY REGION

(In thousands)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

North America

   $ 4,760        28.2   $ 1,431        10.6   $ 32,439        60.1   $ 47,795        47.9

South America

     12,123        71.8     10,724        79.1     21,567        39.9     12,495        12.5

Southeast Asia

     —          —       1,398        10.3     —          —       4,266        4.3

West Africa

     —          —       6        0.0     —          —       35,172        35.3
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 16,883        100.0   $ 13,559        100.0   $ 54,006        100.0   $ 99,728        100.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Non–GAAP Measures

We define Adjusted EBITDA as net loss plus interest expense, income taxes, depreciation and amortization, provision for doubtful accounts, non–cash equity–based compensation, gain on disposal of property and equipment, foreign exchange loss, (gain) on extinguishment of long-term debt, and certain non–recurring expenses. Adjusted Gross (Loss) Profit is defined as gross (loss) profit plus depreciation and amortization expense related to cost of services.

Adjusted EBITDA is used by our management as a supplemental financial measure to assess: (i) the financial performance of our assets without regard to financing methods, capital structures, taxes, historical cost basis or non-recurring expenses; (ii) our liquidity and operating performance over time in relation to other companies that own similar assets and calculate Adjusted EBITDA in a similar manner; and (iii) the ability of our assets to generate cash sufficient to pay potential interest cost. We consider Adjusted EBITDA as presented below to be the primary measure of period–over–period changes in our operational cash flow performance.

Our management uses Adjusted Gross (Loss) Profit as a substantial financial measure to assess the cost management and performance of our projects. Within the seismic data services industry, gross profit is presented both with and without depreciation and amortization expense on equipment used in operations and, therefore, we also use this measure to assess our performance over time in relation to other companies that own similar assets and calculate gross profit in the same manner.

Adjusted EBITDA and Adjusted Gross (Loss) Profit are not defined under GAAP, and we acknowledge that these are not measures of operating income, operating performance or liquidity presented in accordance with GAAP. When assessing our operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for any other measure of financial performance or liquidity presented in accordance with GAAP. In addition, our calculations of Adjusted EBITDA and Adjusted Gross (Loss) Profit may not be comparable to EBITDA, gross profit or other similarly titled measures utilized by other companies since such other companies may not calculate EBITDA, gross profit or similarly titled measures in the same manner. Further, the results presented by Adjusted EBITDA and Adjusted Gross (Loss) Profit cannot be achieved without incurring the costs that the measure excludes.

 

Safety. Acquisition. Experience    saexploration.com


Reconciliation of Net Loss to Adjusted EBITDA

($ in thousands)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018     2017  

Net loss

   $ (33,346   $ (17,840   $ (34,820   $ (9,013

Interest expense, net

     2,346       8,561       5,487       16,919  

Income taxes

     (1,881     485       (1,257     2,225  

Depreciation and amortization expense (1)

     2,369       3,044       4,868       6,400  

Provision for doubtful accounts

     19,120       —         19,120       —    

Non–cash equity–based compensation

     1,588       636       2,641       1,265  

Gain on disposal of property and equipment, net

     (4     (87     (185     (83

Foreign exchange loss, net (2)

     2,005       1,347       2,179       1,036  

Gain on extinguishment of long–term debt

     —         —         (53     —    

Non–recurring expenses (3)(4)

     183       68       436       180  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (7,620   $ (3,786   $ (1,584   $ 18,929  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Additional depreciation and amortization expense not related to cost of services was $74 and $97 for the three months ended June 30, 2018 and 2017, respectively, and $152 and $202 for the six months ended June 30, 2018 and 2017, respectively

(2)

Includes both realized and unrealized foreign exchange transactions

(3)

In 2018, consists of various non–operating expenses incurred at the corporate location.

(4)

In 2017, consists of severance payments incurred in Peru and Alaska and various non–operating expenses incurred at the corporate location

Reconciliation of Gross (Loss) Profit to Adjusted Gross (Loss) Profit

($ in thousands)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2018     2017     2018      2017  

Gross (loss) profit as presented

   $ (5,122   $ (1,017   $ 3,575      $ 24,127  

Depreciation and amortization expense (1)

     2,295       2,947       4,716        6,198  
  

 

 

   

 

 

   

 

 

    

 

 

 

Adjusted gross (loss) profit

   $ (2,827   $ 1,930     $ 8,291      $ 30,325  
  

 

 

   

 

 

   

 

 

    

 

 

 

 

(1) 

Depreciation and amortization on equipment used in operations

 

Safety. Acquisition. Experience    saexploration.com
EX-99.3

Exhibit 99.3

 

LOGO

SAExploration INVESTOR UPDATE August 2018 A solid foundation of integrity, service and sustainability supports our global operations        


LOGO

Forward Looking Statements    Corporate Profile Ticker Symbol: NASDAQ: SAEX Stock Price (as of 08/07/18): $0.67 1-Month Avg. Daily Volume (shares): ~1.4 million Total Shares Outstanding (as of 08/07/18): (1) ~20.5 million Market Cap. (as of 08/07/18): ~$13.7 million 1) On September 5, 2018, each outstanding share of Series A preferred stock will automatically convert into 3,271.4653 shares of common stock, or, if a warrant election is made, 3,271.4653 conversion warrants (with shares of common stock or warrants, as applicable, issued in whole integral multiples, rounded down in lieu of any fractional shares or warrants, as applicable). The number of shares of common stock and warrants issuable on conversion was determined as set forth in the Certificate of Designations. SAE anticipates that it will issue approximately 109 million new shares or warrants, or some combination thereof, upon conversion of the Series A preferred stock, subject to the rights of certain holders to receive warrants in lieu of shares of common stock.    Forward Looking Statements This presentation, including any oral statements made regarding the contents of this presentation, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended. All statements, other than statements of historical fact, included in this presentation that address activities, events or developments that SAExploration Holdings, Inc. (together with its subsidiaries, the “Company” or “SAE”) assumes, plans, expects, believes or anticipates will or may occur in the future are forward-looking statements. When used in this presentation, words such as “will,” “potential,” “believe,” “estimate,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “plan,” “predict,” “forecast,” “budget,” “guidance,” “project,” “model,” “strategy,” “future” or their negatives or the statements that include these words or other words that convey the uncertainty of future events or outcomes, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Without limiting the generality of the foregoing, forward-looking statements contained in this presentation specifically include the expectations of plans, strategies, objectives, anticipated financial results of the Company and expected benefits from certain transactions and acquisitions, including the acquisition of Geokinetics, Inc. These statements are based on certain assumptions made by the Company based on management’s experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to the adequacy of the Company’s capital resources and liquidity including, but not limited to, access to additional borrowing capacity under the Company’s credit facilities; uncertainties about the Company’s ability to successfully execute the Company’s business and financial plans and strategies; financial performance and results; current economic conditions and other important factors that could cause actual results to differ materially from those projected as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and as updated in the Company’s Periodic Report to be filed on Form 10-Q for the period ended June 30, 2018, and other reports filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. The consummation and actual terms of the new secured convertible notes are subject to a number of factors, including negotiation and execution of definitive documents and satisfaction of customary closing conditions. The terms of the new secured convertible notes could materially differ from those outlined herein and there can be no guarantee that the Company will issue the new secured convertible notes on favorable terms or at all or that it will use the proceeds as outlined herein. This presentation shall not constitute an offer to sell or a solicitation of an offer to purchase any loans or securities. 2


LOGO

Business Overview Global Leader in Logistics, Land & Marine Data Acquisition, and Data Processing and Interpretation Global vertically integrated logistics and geophysical services company founded in 2006 Full service provider with the ability to facilitate projects from conception to data acquisition to data processing and interpretation    Offers a broad range of specialized geophysical solutions to the petroleum and mining industries including: 2D, 3D, 4D, and compressive sensing seismic data acquisition services in land, transition zone (“TZ”), shallow water and deep water marine environments Extensive experience and expertise working in operationally complex areas with topographic, cultural, and environmental challenges Data processing and interpretation services emphasizing quality and deliverability through a specialized suite of advanced technologies including signal processing, depth imaging (“DI”), multi-component, amplitude variation with offset (“AVO”) processing, and quantitative interpretation (“QI”) 3


LOGO

Growth and Scale through Consolidation The acquisition of Geokinetics’ assets will allow SAE to service additional, complementary markets, improve cash flow on new projects, provide access to new and leading technologies and product lines and, most importantly, provide incremental value to an expanded customer base    New Markets Lower 48 Up to three crews targeting multiple unconventional resources plays Permian, Eagle Ford, SCOOP STACK, Austin Chalk, Utica and Marcellus basins Australia Up to two crews Canada (enhanced market) Up to four crews Malaysia (enhanced market) Increase in TZ and shallow water capabilities New Capabilities Full scale data processing and interpretation services Unique suite of patent-protected technologies Reservoir characterization and optimization imaging through time-lapse 4D micro-seismic Enhanced shallow water marine capabilities to complement TZ and deep water experience New Equipment (1) Land Equipment Inventory Recording Equipment 73,500 Gen 2 FairfieldNodal 20,000 5Hz phones 60,000 Sercel 408/428 45,000 Sercel DSU channels 40,000 Conventional geophones 35,000 Multi-component geophones Sources 200 Conventional Heavy Vibrators 30 Mini Vibrators 20 onSEISTM units 100 Portable drills 50 Mechanized drills    Marine Equipment Inventory Recording Equipment 3,000 Sercel SeaRay stations 22,000 Hydrophones Sources 77 Marine airguns 16 Marine compressors Vessels 4 x 55’ Westcoaster Source/Node/Cable Vessels 4 x 60’ Geotiger Modular Source/Node/Cable Vessels 1 x 40’ Geocat Modular Aquavib™ Vessel 3 x TZ40 Modular Source/Node/Cable Vessels 23 x TZ32 Modular Source/Node/Cable/Acoustic Vessels    1) For illustrative purposes only. Not intended to be a comprehensive equipment listing or representative of all equipment purchased in the Geokinetics acquisition. Does not include data processing software and patents also purchased. 4


LOGO

Geographic Reach Assets and Personnel Strategically Positioned to Pursue, Capture and Perform Projects Across the Globe    SAE Legacy Markets New or Enhanced Markets Headquarters: Houston, TX


LOGO

Data Acquisition – 2D, 3D, 4D, & Compressive Sensing Extensive experience and expertise working in operationally complex areas with topographic, cultural, and environmental challenges Land Transition Zone (“TZ”) Shallow Water Deep Water Ocean Bottom Nodes (“OBN”)


LOGO

The Assets to Better Serve Our Customers Since 2006 SAE has operated an asset-light model, renting most of its equipment on a project-by-project basis as contracts are awarded to the company    Owned inventory as a result of this transaction will improve service to customers across the globe    SAE will not be as reliant on availability in the rental market and customers will have the option to express their preference for equipment SAE can now service multiple high channel count, high source count projects Through the acquired technology, SAE will be able to offer additional source options    Broad Band Vibrator Source with the use of “Symphony” Non-Invasive Source Options (OnSeis and Aquavib) New frac monitoring techniques with the use of “Active Frac” 7


LOGO

Data Processing – A Step Change In Capabilities New imaging technologies, workflows, and highly skilled teams turn raw data into information customers can trust to support critical exploration decisions New processing capabilities will complement SAE’s recent implementation of new compressing sensing methodology Integrated Reservoir Geosciences – reduced E&P risks with data analysis including petrophysics, seismic modeling, rock physics and feasibility studies, survey design and illumination studies Time Seismic Processing – Proprietary software and highly experienced staff set the industry standard for statics, noise attenuation, multiple attenuation, signal enhancement and spectral broadening, velocity interpretation and time imaging Depth Imaging – Tailored solutions, including Velocity Modeling, Advanced Kirchoff, Spectral Beam Imaging, and GSP + One Way Wave Equation, to specific geological and geophysical constraints, including high dip, subsalt, complex geology/velocity, and acquisition geometry effects Quantitative Interpretation – AVO processing sequences that incorporate available well log data early in processing for amplitude verification, velocity calibration, and choice of deconvolution parameters with the ability to invert all relevant linear approximations of the Zoeppritz equations 8


LOGO

Differentiated Technology Access to additional technology will complement the company’s current offering Land Marine Acquisition Acquisition SymphonyTM AquaVibTM What is this technology: The only existing fully tested marine vibrator – a What is this technology: Proprietary seismic acquisition method developed to reduce proprietary, environmentally preferable source to airguns the cost associated with acquiring high-fidelity (broadband) seismic data How does it add value to clients: Allows for seismic acquisition in geographies How does it add value to clients: Improved imaging without a meaningful increase in and seasons previously restricted to airguns due to environmental limitations pricing relative to competitors Land Data Acquisition Processing ActiveFracTM Diamond TM & Ethos® What is this technology: A proprietary idea designed to show which fractures DIAMOND™: ® Ethos : remain open after a fracturing job has completed BE® Bandwidth Extension Multi-Component Processing How does it add value to clients: Existing methods indicate the volume of rock Orthorhombic, Depth, and (RTM)    MBNA™ (Proprietary Noise Attenuation) fractured (Stimulated Rock Volume), but not the final productive volume (Effective Reverse Time Migrations RECOVER™ (Proprietary 5D Interpolation SRV) New QI Technologies Routine) Land & Marine Acquisition Optimized Compute for Extremely HTI Analysis for Fracture Characterization Efficient Data Throughput Compressive Sensing Land Acquisition What is this technology: Randomized CS sampling involves multiple sources shooting simultaneously, along with improving sampling efficiency for both sources and receivers OnSEIS Version IITM How does it add value to clients: Compared to conventional designs, a CS survey achieves an order of magnitude improvement in field acquisition efficiency and step- What is this technology: A proprietary impulsive onshore seismic source that is an alternative to function improvements in data quality dynamite and vibroseis How does it add value to clients: Better quality product at a significantly lower cost 9


LOGO

Quality, Health, Safety and Environment Setting the standard for responsible stewardship through an industry-leading quality, health, safety and environmental program Alaska & Canada – Arctic SAE has never had an EPA recordable spill or caused damage to the tundra    All vehicles are equipped with spill protection equipment and are maintained to reduce likelihood of a spill occurring    Workforce is specially trained to identify and proactively avoid places where light snow or wind has caused tundra to become unprotected and when unavoidable, to build ice bridges to further protect the tundra SAE continues to research methods to reduce CO and CO2 emissions through vehicle maintenance and monitoring programs Latin America & Southeast Asia – Jungle & Rain Forests SAE prides itself on maintaining strong, positive relationships with the local communities where it operates Specialized line cutting methodologies, under-canopy-avoidance techniques, and reforestation activities all assist SAE in returning the environment to its natural standard    SAE also employs strict recycling standards and specialized composting techniques to deal with onsite waste Global Health and Safety SAE always plans and prepares facilities to assist local populations with basic and emergency healthcare needs A robust health and safety program along with an effective injury management program continues to produce significantly lower injury frequencies than industry standard 10    


LOGO

Differentiated Business Model North America Land International Land Transition Zone Shallow Water Deep Water Equipment Manufacturing Multi-Client Data Library Data Processing & Interpretation Note: Company logos used above are registered trademarks and service offerings may not be a complete listing 11


LOGO

Pro Forma Backlog and Bids Outstanding Bids Outstanding (1) Historical Backlog ($mm) 1% $140 48% Land Data Acquisition $118.7 $120 $491.8 MM Marine Data Acquisition 50% $100 Data Processing $80.0 $80 $67.5 $58.8 $60 $53.1 $52.5 $49.8 $40 $35.3 Backlog by Geography (1) Backlog Realization (Est.) (1) $20 $0 2% 6% Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 40% 2H 2018 60% 2019 92% North America Southeast Asia Rest of World 1) Pro Forma Backlog and Bids Outstanding as of June 30, 2018, including the impact of the Geokinetics asset acquisition 12 Note: The estimations of realization from SAE’s backlog can be impacted by a number of factors, including deteriorating market conditions, customer delays or cancellations, permitting or project delays and environmental conditions.


LOGO

Capital Structure Transition Preferred Equity Purchase Money New Secured Convertible New Secured Convertible (6) ($ in millions) (Series A) Equitization Facility Financing Notes Financing Notes Conversion Current Transaction Pro Forma Transaction Pro Forma Transaction Pro Forma Transaction Pro Forma Tranche Capital Structure Adjustments Capital Structure Adjustments Capital Structure Adjustments Capital Structure Adjustments Capital Structure ABL Credit Facility(1) $30.0 - $30.0 - $30.0 ($25.0) $5.0 - $5.0 Purchase Money Facility - - - $23.4 23.4 (23.4) - - - Amended Term Loan 29.0 - 29.0 - 29.0 - 29.0 - 29.0 New Secured Convertible Notes - - - - - 50.0 50.0 ($50.0) - Second Lien Notes 7.0 - 7.0 - 7.0 - 7.0 - 7.0 Total Debt $66.0 $66.0 $89.4 $91.0 $41.0 Preferred Equity (Series A)(2) 33.3 ($33.3) - - - - - - - Total Debt + Preferred $99.2 ($33.3) $66.0 - $89.4 - $91.0 - $41.0 Share Count (millions) / % Ownership (3) Common Shares(4) 18.988 / 44.7% 18.988 / 12.5% 18.988 / 12.5% 18.988 / 12.5% 18.988 / 7.0% Series C Warrants 7.977 / 18.8% 7.977 / 5.3% 7.977 / 5.3% 7.977 / 5.3% 7.977 / 3.0% Series D Warrants 12.198 / 28.7% 12.198 / 8.1% 12.198 / 8.1% 12.198 / 8.1% 12.198 / 4.5% MIP Shares Vested(4) 3.322 / 7.8% 3.322 / 2.2% 3.322 / 2.2% 3.322 / 2.2% 3.322 / 1.2% Preferred Equity (Series A)(2)(5) - 108.842 / 71.9% 108.842 / 71.9% 108.842 / 71.9% 108.842 / 40.3% New Secured Convertible Notes - - - - 119.048 / 44.0% Total 42.485 / 100.0% 151.326 / 100.0% 151.326 / 100.0% 151.326 / 100.0% 270.374 / 100.0% Notes (1) ABL Credit Facility balance following New Secured Convertible Notes Financing is included for illustrative purposes only and does not reflect a projection. (2) Assumes PIK dividends paid through 09/05/18 (effective date of conversion settlement). (3) Illustratively shown pro forma for exercise of all warrants. (4) Shown pro forma for vesting of MIP shares on 8/6/18. (5) Series A Preferred Equity converted into combination of warrants and common equity shares. Share count indicates pro forma share count for exercise of all warrants. (6) Shown for illustrative purposes. New Secured Convertible Notes are not mandatorily convertible unless certain conditions are met after the third anniversary of the issue date.    13


LOGO

Key Considerations Capital structure aligned with long-term Capital Full suite of new and leading technologies goals and positioned to leverage benefits of complements SAE’s current offerings and this acquisition to maximize cash flow and Technology Structure expands value chain for customers profitability upon market recovery The increase in equipment increases the ability to service Key personnel and relationships are customers across the globe and Assets Personnel instrumental in continuing to deliver best-meaningfully improve financial in-class service to our customers and performance on new projects stakeholders Immediate access to new markets and New processing capabilities allow SAE Processing Markets customers with an expanded geographic to add incremental value beyond the footprint allows SAE to pursue, capture and acquisition phase of a project perform projects across the globe 14