-- Tesla generated $31.7 million of EBITDA(2) and $5.5 million of net income on $191.7 million of revenues in 2012, a marked improvement over $23.9 million of EBITDA(2) and $0.6 million of net income on $225.4 million of revenues in 2011.-- Tesla's gross margin (1) of $51.9 million (32% of revenues excluding reimbursables) in 2012 was a significant improvement compared to $39.8 million (25%) in 2011.-- Tesla Canada peaked at nine crews and operated over 100,000 channels during the seasonally strong first quarter of 2012 almost all of which was on three-dimensional ("3D") and three-component ("3C") programs. Canadian operations utilized 23,000 stations (69,000 channels) of 3C recording equipment, including 13,000 stations (39,000 channels) owned by the Company.-- The Company entered into an extended seismic services agreement (the "Agreement") with a multi-client geophysical company for an initial 24 month period. In connection with the Agreement, the Company purchased 10,000 stations of a wireless multi-component seismic acquisition system ("Hawk") and auxiliary equipment at a cost of approximately $18.0 million.-- Tesla USA successfully utilized the Hawk system throughout the second half of 2012 under the Agreement before mobilizing the system to Canada for a project during the first quarter of 2013.-- Tesla Trinidad successfully completed the year-long Guayaguayare project in Trinidad in the second quarter of 2012. Additionally, Tesla incorporated a new subsidiary, Tesla Exploration Colombia S.A.S. ("Tesla Colombia") in early 2013 further expanding the Company's geographical footprint in the region.-- Tesla Offshore significantly improved revenues from the comparative year benefitting from work on up to four geophysical vessels, most of which was on large scale day rate projects during the second half of the year. This supplemented the historically strong summer construction season supporting client operations on up to 12 vessels.-- Tesla Offshore expanded its operations outside of the Gulf of Mexico, its historical operating area, with special projects in Alaska, Trinidad, Israel, Argentina and other international locations.-- The Company approved a $6 million capital expenditure to acquire a Bluefin Autonomous Underwater Vehicle ("AUV") which is expected to be operational by September 2013. Tesla Offshore hired several experienced personnel to manage the AUV service line and develop international markets.-- Tesla International operated a crew in the UK and Europe throughout 2012 on hydrocarbon and mineral projects.-- Tesla International secured land and marine projects in Tanzania and the Democratic Republic of the Congo ("DRC") that will operate into May 2013.Tesla International also strengthened its backlog with a contract to provide two crews on a day rate basis in Somaliland for a minimum of 200 operating days beginning in April of 2013.-- The Company hired and appointed Rob Kendall to lead Tesla's Research and Special Projects group focusing on micro-seismic and fibre optic applications.
Fourth Quarter Financial Results:
Despite a decline in revenues, gross margin grew slightly in the fourth quarter of 2012 compared to the fourth quarter of 2011. The Company's consolidated revenues including reimbursables decreased 33% in the fourth quarter of 2012 compared to the fourth quarter of 2011 while the Company's revenue excluding reimbursables decreased 25%. Improvements in activity levels for Tesla Canada and Tesla Offshore were more than offset by declines in activity levels for Tesla USA, Tesla International and Tesla Trinidad. The Company had improvements in gross margin from Tesla Canada, Tesla USA and Tesla Offshore which more than offset the decline in Tesla International's gross margin. Gross margin as a percentage of total revenue (including reimbursables) increased to 28% in the fourth quarter of 2012 from 19% in the fourth quarter of 2011 due mainly to the improvement in Tesla USA's operations including the significant decrease in flow-through reimbursables associated with Tesla USA's revenues. Gross margin as a percentage of revenue (excluding reimbursables) improved to 32% in the fourth quarter of 2012 compared to 24% in the fourth quarter of 2011 as improvements in Tesla USA's operations and a reduced weighting of Tesla Trinidad's low margin front-end operations more than offset slight declines for Tesla Canada, Tesla Offshore and Tesla International.