Mitcham Industries Q2 2008 Earnings Conference Call Transcript

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

Question: Neal Dingmann - Dahlman Rose & Company - Analyst : Bill, can you give me an idea now, obviously looks like Seamap to me, I would say, the baseline sales look -- continue to get better and better. Is there sort of a baseline growth rate now? This $5 million, is that a number we can see or is that still going to be somewhat lumpy?

Question: Neal Dingmann - Dahlman Rose & Company - Analyst : Okay. Looking over to the leasing side, Bill, can you give a little color maybe or a little breakdown as far as on that $6 million plus for this last quarter, kind of geographically where that came and will that sort of continue in those regions or do you see -- you mentioned Russia. Do you see other regions, Australia, other areas sort of increase, and I am just kind of wondering those regions versus how much Canada is contributing these days?

Question: Neal Dingmann - Dahlman Rose & Company - Analyst : Okay. And then the last question on the 7,000 channels, I guess it is safe to say that you have got a place to go with all those and what is it costing these days sort of on a per-channel basis for you to bring those out? I assume that will come out of the current cash you all have?

Question: Neal Dingmann - Dahlman Rose & Company - Analyst : Okay. That's what I was getting at. We probably won't see it delayed for at least like you said January to February is when it will start hitting?

Question: Neal Dingmann - Dahlman Rose & Company - Analyst : Okay, thanks.

Question: Bo McKenzie - Pritchard Capital - Analyst : Hi, guys. Congratulations on a really strong Q2.

Question: Bo McKenzie - Pritchard Capital - Analyst : Bill, can you go through where you stand in the progress of moving manufacturing out of the U.K. into Singapore at Seamap and how much more is left with suddenly 4000 and anything else, that's still over in the U.K.?

Question: Bo McKenzie - Pritchard Capital - Analyst : Which then in turn should show some decent improvements to margins, mix issues aside?

Question: Bo McKenzie - Pritchard Capital - Analyst : All right. Have you guys got an early read on what the channel need might be in Russia for this winter?

Question: Bo McKenzie - Pritchard Capital - Analyst : All right. Great. I guess I have got to requeue if I want to ask anything else.

Question: Terese Fabian - Sidoti & Co - Analyst : Good morning. I have a question on your Seamap sales. Can you indicate how much of that is been Link and BuoyLink products and how much are ancillary products in the sales numbers.

Question: Terese Fabian - Sidoti & Co - Analyst : And I noticed, I hope this doesn't come as a question, that you're not giving guidance on backlog. Is there any guidance?

Question: Terese Fabian - Sidoti & Co - Analyst : Okay. Great. For my second question, you've made acquisitions with some regularity and you have cash and you have no debt. I am not asking you what you're going to buy, but what kind of profile do you look for when you look at an acquisition target?

Question: Terese Fabian - Sidoti & Co - Analyst : Okay. Thank you.

Question: Tyson Bauer - Wealth Monitors - Analyst : I'm going to follow up on the last question and reverse it a little bit. Billy, given the amount of growth you've been able to accomplish and your outlook and the strong balance sheet you have, is there a large target on your back? 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 - Wealth Monitors - Analyst : If you were to achieve $100 million in revenues in years out, not putting a timetable on it, obviously then you become much more meaningful as a standalone operation for somebody else.

Question: Tyson Bauer - Wealth Monitors - Analyst : Rob, can you give us a little outlook on the SG&A, where that should trend. Is what we saw this past quarter representative of what we're going to see going forth or how is that going to play out?

Question: Tyson Bauer - Wealth Monitors - Analyst : Okay. The last question is how important has the Sercel product demand been for benefiting in your growth opportunities and seizing some of these activities going on globally just from their advancements and their products and people wanting that?

Question: Tyson Bauer - Wealth Monitors - Analyst : Will we see an expansion of that relationship as we saw last year?

Question: Tyson Bauer - Wealth Monitors - Analyst : Thanks a lot, Billy and Rob.

Question: Pierre Conner - Capital One Southcoast - Analyst : Good morning, gentlemen.

Question: Pierre Conner - Capital One Southcoast - Analyst : My congratulations also on a strong second quarter. To that end actually, I was going to ask the direct costs on the leasing side were quite well controlled and I wondered if during the quarter or the course of the last couple of quarters have you implemented some things? I would have expected potentially with channels coming back, et cetera, to have a little higher cost in that arena? What can you tell us about your direct costs on the leasing side?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay.

Question: Pierre Conner - Capital One Southcoast - Analyst : I know one of the things you're working on, Rob, was sort of a utilization, so maybe that's what you're saying is that the utilization was, I don't know if you have numbers on that, but you were -- you've trended upward on that. Again, on a year-over-year basis second quarter?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. My final question is about -- though over on the Seamap side and you mentioned -- we talked about the backlog kind of continuing. What do you see about competitors in this business right now, Bill? I know there has been some recent transactions and you are supplying the GunLink 4000 that does control some, I believe, some bulbs in your port guns. What do you see in the competition going forward?

Question: Pierre Conner - Capital One Southcoast - Analyst : That's exactly what I was looking for was how are you positioned relative to the competition to continue this good performance in Seamap and I think you laid it out for me and it's what I needed. I will recycle back if I have anything else. Thank you, gentlemen. 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: Tameron Manukian - Greenwood Investments - Analyst : Good morning. Congratulations on a very strong second quarter.

Question: Tameron Manukian - Greenwood Investments - Analyst : Just a follow-up question on GunLink. I just want to get a better feel of GunLink. Is it the biggest product in your Seamap sales? And also is it the highest margin product within the Seamap segment?

Question: Tameron Manukian - Greenwood Investments - Analyst : In terms of margins?

Question: Tameron Manukian - Greenwood Investments - Analyst : Okay. Now, I think on Friday CGGVeritas had the press release saying that they have a $250 million in contracts. I was wondering if you had any indication from that that some of that business will be coming from you or are you going to be leasing some of your equipment or anything like that?

Question: Tameron Manukian - Greenwood Investments - Analyst : Is Veritas still a significant customer of yours?

Question: Tameron Manukian - Greenwood Investments - Analyst : Okay. Does Sercel have anything similar to your Seamap product?

Question: Tameron Manukian - Greenwood Investments - Analyst : Okay. Now, in terms of -- do you have estimate for capital expenditures in 2007?

Question: Tameron Manukian - Greenwood Investments - Analyst : Capital expenditures estimate for '07, fiscal '07. I mean this year.

Question: Tameron Manukian - Greenwood Investments - Analyst : Okay. And this 7000 channels, do you know where they're going to be located in Russia, here in the US?

Question: Tameron Manukian - Greenwood Investments - Analyst : Various locations. 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: Tameron Manukian - Greenwood Investments - Analyst : Your revised estimate of $55 million to $65 million, does it include any benefit of this additional 7000 channels?

Question: Tameron Manukian - Greenwood Investments - Analyst : Okay. And another question, we know that Texas, Gulf of Mexico, was very raining the second quarter and a lot of contractors were under-utilized in the second quarter because of the rainy season. Were you affected at all by a lot of rain?

Question: Tameron Manukian - Greenwood Investments - Analyst : Okay. But are you generally affected by that or by excessive rain, would you be affected by something like that or you are not usually affected if you have equipment in an area where it is excessively raining?

Question: Bo McKenzie - Pritchard Capital - Analyst : I wish I had known you could ask as many questions as you wanted. The 7000 channels you guys are buying, 428, 408, what? A mix of stuff?

Question: Bo McKenzie - Pritchard Capital - Analyst : If you're buying more 428 than the original order you put in, what was that late last year, does that imply you're having good successes in leasing that 428 equipment out now?

Question: Bo McKenzie - Pritchard Capital - Analyst : Along that line, how many stations will you have post what you take delivery of?

Question: Bo McKenzie - Pritchard Capital - Analyst : Okay. I got you.

Question: Bo McKenzie - Pritchard Capital - Analyst : Okay. I know this is a third question but how many stations are you at now in the DSU 3?

Question: Bo McKenzie - Pritchard Capital - Analyst : Okay.

Question: Bo McKenzie - Pritchard Capital - Analyst : Great. Thanks a lot. 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: Terese Fabian - Sidoti & Co - Analyst : Hi. I have a follow-up on international activities. There have been some reports of increased exploration in seismic work, considerable amount of contracts and such coming from South America and north Africa. Since you've had good success with your Ufa office in Russia, would you consider establishing other international locations to increase utilization? And can you talk a little bit about how you get equipment out to the field now from your various facilities?

Question: Terese Fabian - Sidoti & Co - Analyst : Okay. That's very helpful. Thanks, Bill. Just one other question. Do you know whether there is any 2D work being done with your equipment or is it all 3D.

Question: Terese Fabian - Sidoti & Co - Analyst : Yes.

Question: Terese Fabian - Sidoti & Co - Analyst : Okay, that's great. Thank you.

Question: Pierre Conner - Capital One Southcoast - Analyst : Thanks, guys, just want to follow back up on a similar question that was asked about your outlook on Russia year-on-year going into the winter. Do you have any visibility on Canada year-on-year going into the winter? It's just been a lot of issues relative to rig counts and I wondered about separation of rig activity and seismic activity. I realize we're coming off of a low period, but what's any outlook for next winter Canada?

Question: Pierre Conner - Capital One Southcoast - Analyst : Great. That's what I needed. Thanks very much, guys.