Pulse Seismic Inc. (“Pulse” or the “Company”) is pleased to report its financial and operating results for the year ended December 31, 2023. The audited consolidated financial statements, accompanying notes and MD&A are being filed on SEDAR (www.sedar.com) and will be available on Pulse’s website at www.pulseseismic.com.
Pulse’s Board of Directors today approved a quarterly dividend of $0.01375 per share. The total of the regular dividend will be approximately $715,000 based on Pulse’s 52,003,063 common shares outstanding as of February 15, 2024, to be paid on March 11, 2024, to shareholders of record on March 1, 2024. This dividend is designated as an eligible dividend for Canadian income tax purposes. For non-resident shareholders, Pulse’s dividends are subject to Canadian withholding tax.
“The financial performance of the Company in 2023 was exceptional, with material increases in both traditional and transaction-based sales over the prior year,” stated Neal Coleman, the Company’s President and CEO. “We returned 94% of 2023 free cashflow to our shareholders. That is $23.3 million of capital allocated to dividends and share buybacks. Revenue was $39.1 million for the year, 63% of which converted to shareholder free cashflow. Having zero debt and a low-cost structure allows for significant returns of capital in high sales years,” Coleman continued. “I am also very pleased to report a great start to 2024, as we have earned $8.3 million of data licensing revenue so far this year,” he concluded.
HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2023
The return of capital to shareholders in 2023 including all declared dividends and NCIB share purchases, totalled $23.3 million;
Dividends of $0.40375 per share were declared in 2023. Regular dividends declared and paid totalled $0.05375 per share. The annualized regular dividend of $0.05 per share was increased by 10% to $0.055 per share in the first quarter of the year. The first of two special dividends declared in 2023, was for $0.15 per share and paid in the third quarter. The second, for $0.20 per share, was declared in December and paid on January 8, 2024. Total dividends paid in 2023 were $10.9 million and the January paid dividend totalled $10.5 million;
1,005,006 shares were purchased during the year under the Normal Course Issuer Bid (NCIB) at an average price of $1.92 per share, for total cost of approximately $1.9 million;
Shareholder free cash flow(a) was $24.8 million ($0.47 per share basic and diluted) compared to $3.2 million ($0.06 per share basic and diluted) for the year ended December 31, 2022;
EBITDA(a) was $30.4 million ($0.57 per share basic and diluted) compared to $2.0 million ($0.04 per share basic and diluted) for the year ended December 31, 2022;
Net earnings were $15.0 million ($0.28 per share basic and diluted) compared to a net loss of $7.9 million ($0.15 per share basic and diluted) for 2022;
Total revenue was $39.1 million compared to $9.6 million for the year ended December 31, 2022; and
At December 31, 2023, the Company remained debt-free and had a cash balance of $15.9 million as well as $25.0 million of available liquidity on its credit facility. Subsequent to year end the Company amended its credit facility to a revolving demand facility with a borrowing limit of $5.0 million.
HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2023
A special dividend of $0.20 per share, totalling $10.5 million, was declared in December 2023 and paid on January 8, 2024;
The regular quarterly dividend of $0.01375 per share was paid in the fourth quarter;
Shareholder free cash flow was $10.9 million ($0.21 per share basic and diluted) compared to $908,000 ($0.02 per share basic and diluted) in the fourth quarter of 2022;
EBITDA was $13.6 million ($0.26 per share basic and diluted) compared to $467,000 ($0.01 per share basic and diluted) in the fourth quarter of 2022;
Net earnings were $8.3 million ($0.16 per share basic and diluted) compared to a net loss of $1.9 million ($0.04 per share basic and diluted) in the fourth quarter of 2022;
Total revenue was $16.9 million compared to $2.4 million for the three months ended December 31, 2022;
A total of 59,500 shares were purchased under the NCIB in the fourth quarter, at an average price of $1.87 per share and total cost of approximately $112,000; and
The TSX accepted Pulse’s notice of intention to commence an NCIB, allowing Pulse to purchase up to 2,957,406 common shares between December 20, 2023 and December 19, 2024. The Company’s purchase of shares during any trading day will not exceed 2,618 common shares, subject to Pulse’s ability to make block purchases in accordance with the TSX facilities and rules. Shares purchased on behalf of Pulse, will be carried out by Peter’s and Co. Limited.
OUTLOOK
Following the high level of data licensing and financial performance achieved in 2023, the Company has also experienced a solid start to 2024, generating $8.3 million of revenue as of February 15th. While the outlook for economic and commodity markets is mixed, several factors are expected to have a positive impact on the year ahead in the energy industry. The continued strength in crude oil prices and expectations that global demand for fossil fuels will continue to trend upward is key. That said, natural gas prices have continued to decline and are currently at a three and a half year low. The completion of the Trans Mountain Pipeline Expansion project is imminent and the progress on the LNG Canada facility is expected to be operational in early 2025. These critical energy projects will provide increased export capacity for delivering both oil and natural gas to global markets.
After two high-volume years of industry M&A activity, it is anticipated to decline year-over-year to approximately $12 billion in 2024. This forecast reflects the stronger balance sheets and profitability in the industry and, accordingly, fewer assets and companies for sale. An initial 2024 forecast by Enserva anticipates industry capital spending growth of a further 10 percent this year, and land sales are forecast to remain robust. In November 2023, the Canadian Association of Energy Contractors issued an initial 2024 drilling forecast of 6,229 wells, up from 5,748 in 2023.
The Company cautions, as always, that industry conditions do not provide visibility regarding Pulse’s seismic data library sales levels and remains focused on the business practices that have served it throughout the full range of conditions. Pulse maintains a strong balance sheet, has zero debt, no capital spending commitments, and a disciplined and rigorous approach to evaluating growth opportunities. This 15-person company, led by an experienced and capable management team, operates with a low-cost structure and focuses on developing excellent client relations and providing exceptional customer service. Pulse’s strong financial position, the high leverage to increased revenue in its EBITDA margin, and careful management of its cash resources have resulted in the return of capital to shareholders through regular and special dividends and the repurchase of its shares.
CORPORATE PROFILE
Pulse is a market leader in the acquisition, marketing and licensing of 2D and 3D seismic data to the western Canadian energy sector. Pulse owns the largest licensable seismic data library in Canada, currently consisting of approximately 65,310 square kilometres of 3D seismic and 829,207 kilometres of 2D seismic. The library extensively covers the Western Canada Sedimentary Basin, where most of Canada’s oil and natural gas exploration and development occur.
