Mitcham Industries Inc Q1 2014 Earnings Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Veny Aleksandrov - FIG Partners - Analyst : Good morning, how are you?

Question: Veny Aleksandrov - FIG Partners - Analyst : My first question is on Columbia. It is great that there is some work going on there. And I heard you shipped several thousand channels already. Can you tell us a little bit more if permitting is getting easier, or there are jobs -- there are just more jobs available now?

Question: Veny Aleksandrov - FIG Partners - Analyst : Great. Okay. And in Russia, summer work, that is -- I mean, usually in Russia you are in the winter. Can you elaborate a little bit on the summer work, and how many channels we can expect you to ship over there?

Question: Veny Aleksandrov - FIG Partners - Analyst : Yes, great. And my last question, and I will turn it over. On the Seamap side, Billy talked about 2014 being than better than 2013. Do you have visibility on any big projects, any big contracts that you are bidding on?

Question: Veny Aleksandrov - FIG Partners - Analyst : Okay. I am sorry. I read it, the Seamap side.

Question: Veny Aleksandrov - FIG Partners - Analyst : Thank you so much, and I'll turn it back. Thanks.

Question: Ryan Fitzgibbon - Global Hunter Securities, LLC - Analyst : Good morning, guys. Nice quarter.

Question: Ryan Fitzgibbon - Global Hunter Securities, LLC - Analyst : I am going to follow up on Veny's question on Latin America. The incremental channels you plan to put into work, call it Q3 and Q4 of this year, can you give us a sense of magnitude as to how many channels that actually will be?

Question: Ryan Fitzgibbon - Global Hunter Securities, LLC - Analyst : And so those 25,000 channels, should we assume most are utilized in the back half of the year?

Question: Ryan Fitzgibbon - Global Hunter Securities, LLC - Analyst : Okay. That's helpful. And then same kind of question for Europe; I know you got some channels sitting on the shelf there. Any sense as to how many could actually go back to work in the back half of the year, if you can land some of these jobs?

Question: Ryan Fitzgibbon - Global Hunter Securities, LLC - Analyst : Okay. That's helpful. And then, Billy, maybe to follow on to your comment about fiscal 2014 being better than fiscal 2013. The ramp for Seamap is obviously pretty big coming out of Q1. Should we assume for modeling purposes, Seamap reflects -- similar to 2013 levels, I would call $32 million, and a lot of the growth you are going to see this year is on equipment leasing really coming out of better utilization in Latin America and Europe?

Question: Ryan Fitzgibbon - Global Hunter Securities, LLC - Analyst : Okay. Good to hear. And then last one for me, just in terms of capital allocation for the year, maintaining the CapEx budget, can you talk a little bit about what is going in the CapEx budget in the back half of the year? And then with all the free cash flow you should generate, should we expect you to keep buying back your stock here or what's the actual plan? Assuming you don't want to build cash, given you have debt on your books now.

Question: Ryan Fitzgibbon - Global Hunter Securities, LLC - Analyst : Okay. Thanks for the time, guys.

Question: Joel Luton - APS Financial Corporation - Analyst : Good morning, Bill and Rob. Just a question on Europe in terms of kind of the change in tone there, are you seeing less concern about fracking from a political standpoint? And why do you think the market in Europe is improving, from also kind of an -- just an economic standpoint? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Joel Luton - APS Financial Corporation - Analyst : Okay. And then just one more question. With respect to North America, it seems -- definitely seems to be kind of cooling there. Could you give a little bit more color on the reasons for that, and kind of what you see going forward?

Question: Joel Luton - APS Financial Corporation - Analyst : You all are the big picture guys.

Question: Joel Luton - APS Financial Corporation - Analyst : Okay. Appreciate it.

Question: Georg Venturatos - Johnson Rice & Company - Analyst : Good morning, Bill, Rob. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Georg Venturatos - Johnson Rice & Company - Analyst : I wanted to touch on the Seamap side. Obviously, the outlook remains strong there. It sounded like last call, it was more of a back half weighted expectation for the year. Just wanted to check on --look, I know Q2 looks strong now. We have got one GunLink, two BuoyLink. Was that a shift forward from the back half or is that incremental to maybe what we were seeing on the order side last quarter?

Question: Georg Venturatos - Johnson Rice & Company - Analyst : Okay. So still expect strong pace in the back half in terms of system orders, probably similar to what we are seeing?

Question: Georg Venturatos - Johnson Rice & Company - Analyst : Okay. Great. You mentioned the BuoyLink 4DX product. Could you maybe talk about that a little bit, and what it kind of gives you in terms of advantage to what you have got now in your offering?

Question: Georg Venturatos - Johnson Rice & Company - Analyst : Right. Great.

Question: Georg Venturatos - Johnson Rice & Company - Analyst : I figured. I appreciate that summary, Guy. That was great.

Question: Georg Venturatos - Johnson Rice & Company - Analyst : Yes. Yes. (Laughter). Well, that's good. More on Seamap, just in terms of the investment that you talked about in that business, should we expect further product development, more being next generation of existing offerings? Or do you think you could expand beyond kind of what you have today? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Georg Venturatos - Johnson Rice & Company - Analyst : Okay.

Question: Georg Venturatos - Johnson Rice & Company - Analyst : Perfect. Appreciate the answers, guys.

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Good morning, gentlemen.

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Couple quick questions on free cash flow. Your lease pool depreciation decline -- obviously, as your equipment gets a little older in the pool, what kind of schedule are we looking at as we go through this year and really going into next year? Are we going to see a market decline in that expense line as we go forward?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Correct. In regards to that CapEx and the determination of what is going to continue that $5 million, $6 million, $7 million a quarter spend rate, when do you make that determination on whether you put in that order or not? And how far in advance do you make those determinations, based on what your customers are exhibiting as far as their activity?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : And are you obligated to take a certain amount from [inaudible] or other suppliers this year?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Okay. Given -- in a net number here, you are talking about some activity in Latin America, some strengthening in Europe, but mainly in the second half. Do you have enough activity as you see it now for the second quarter to surpass your leasing -- equipment leasing revenue that you did a year ago?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Correct. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Last year, if you remember, that was an extremely weak quarter that you posted on those revenues.

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Is this year any different or are we -- or too early to tell yet?

Question: Tyson Bauer - Kansas City Capital Associates - Analyst : Well, all right. Thank you, gentlemen. We look forward to Q2.