Mitcham Industries Q2 2010 Earnings Conference Call Transcript

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

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

Question: Pierre Conner - Capital One Southcoast - Analyst : Billy, first, some thoughts on the timing of the increased activity of the lease pool equipment. So, when did the 27,000 channels of the 428 DSU3 actually begin to generate revenue? Was there any of that in the reported quarter?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. And is that defective? Where are you in utilization now for North America? And I know this is a difficult one and there's wide ranging numbers. But if we're at 50% or 60% or are we closer to effectively fully utilized now?

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

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. Is that existing equipment in North America capable? Is there further equipment that can be moved internationally or is it RSR and not available for use?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. All right, that leads me to the next one then, Rob, Billy, which is relative to your activity in South America and southeast Asia and I know that last time you reported you were moving about 1,000 channels into southeast Asia another 2,500 to South America. So, are those completed and they're more ongoing, etc.? So, what's sort of your movement situation? 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: Pierre Conner - Capital One Southcoast - Analyst : And again, just trying to get a feel for the timing, those were starting up kind of during the quarter?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. All right, that's good. That's exactly what I was looking for, okay.

Question: Pierre Conner - Capital One Southcoast - Analyst : All right, still on the leasing side. Is VSP's, if you would, give us an update of how many levels that you currently own? I think we're at 150 levels, they're long-term. And were you getting some more this summer? Did you take delivery? And what's your current sort of VSP count?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. All right. That's helpful too. And then, the last one is on Seamap. What else is in there, besides the Polarcus deliveries, of size? You mentioned repair and such. Were there any significant GunLink 4000 deliveries in addition to the Polarcus deliveries? 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: Pierre Conner - Capital One Southcoast - Analyst : Okay, that's what you said. It was in addition to the Polarcus, I suppose it surprised me to the upside and that's what I was looking for.

Question: Pierre Conner - Capital One Southcoast - Analyst : Well, maybe that does lead to just a follow-on that related to that. Is that you mentioned, Billy, that the outlook might include some additional GunLink systems beyond the Polarcus. And that's a separate topic, you could pursue separately. But are those additional opportunities you're looking at for new builds you expect or are they retrofits on existing vessels?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. All right, that's helpful. All right, I'm going to let some other folks cycle through and I'll follow-up. Gentlemen, thank you very much. 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: Neal Dingmann - Wunderlich Securities, Inc - Analyst : Morning, guys. Say, Bill, it sounds like you've got a lot of things going internationally, maybe I think more than people realize. It that through -- are you kind of partnering with these customers or what, number one, sort of the inroads to some of these new regions? How are you initially getting in there? And then, how do you see yourselves expanding in some of these areas? Is it sort of through a partnership with some of these customers over there? Maybe give us a bit more color on that.

Question: Neal Dingmann - Wunderlich Securities, Inc - Analyst : Got you. And then, looking at -- will you utilize at all, I know you've got the plant over in Singapore on the Seamap side or will these be just -- you'll continue to keep the marine completely separate from what's going on on this other side?

Question: Neal Dingmann - Wunderlich Securities, Inc - Analyst : Got you. Okay.

Question: Neal Dingmann - Wunderlich Securities, Inc - Analyst : Okay. And Bill, you mentioned a little bit of softness in marine but I think, as you said, it probably followed or maybe trailed the land side. What's your thought on -- do you see that or does it -- through bids or et cetera, do you see that already beginning to improve? And if so, is that through taking some other market share or is that sort of the overall market growing in addition? Or what are you seeing it in just sort of marine in general? 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: Neal Dingmann - Wunderlich Securities, Inc - Analyst : Sure. And then lastly, you mentioned a bit with Pierre, kind of the utilization. I wanted to try to get an idea on pricing or pricing power, what you see or what you maybe expect to see internationally versus the US? Are the international markets maybe a bit tighter, where maybe by the end of this calendar year or sometime in 2010 you begin to see a bit more uptick in pricing versus what you could get in the US?

Question: Neal Dingmann - Wunderlich Securities, Inc - Analyst : Okay. Got you. You guys probably haven't seen some of the slippage near as much as some of the other oilfield services have. Okay guys, look forward to all the international activity. Thanks.

Question: Terese Fabian - Sidoti & Company - Analyst : Thank you and good morning. I have a question on your Seamap sales. You are seeing some good revenue flow, aside from the system sales and you refer to the advantage of having a broader install base. Can you identify how many systems are out there and what your customer base is? And whether this is going to be a recurring revenue stream for use at a level between quarters?

Question: Terese Fabian - Sidoti & Company - Analyst : And what does -- what is the advantage of the newer -- of the larger system, of the 4000 over the 2000?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. Thank you. And aside from the upgrading the repairs and servicing of the systems that are there, is that providing, $200,000 a quarter or $1 million or whatever?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. Thank you. And then, I have a sort of a macro question on the South American market. Can you talk about a little bit about what's happening in Peru and Colombia, the customer base there you're dealing with? Are these new seismic companies? I expect there are not many barriers to entry for a seismic contractor to set up?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. And then, one last question on the bad debt expense you had. You also had a substantial expense in the fourth quarter of the last fiscal year. What are you seeing with your customers? I imagine that crew sizes are being cut down, particularly in North America but can you talk a little bit about the overall market?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. Thank you. And then, just one last question on the Russian market. I'm hearing that there is some pickup with the higher oil prices. What are you experiencing?

Question: Terese Fabian - Sidoti & Company - Analyst : All right, thank you.

Question: Pierre Conner - Capital One Southcoast - Analyst : No, a little bit farther east. Thanks for letting me back. The next sets of questions are around margins. So, in the leasing business and I understand completely that we're moving equipment around and that it's a low period. But given the increased international, although offsetting being opening up branch offices, where do you see your margins in the leasing business returning? I'm assuming they'll improve with increased utilization. And do they approach prior '09 levels, in the mid 90's? 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: Pierre Conner - Capital One Southcoast - Analyst : And the added cost for the basis isn't material to that number?

Question: Pierre Conner - Capital One Southcoast - Analyst : All right. Same sort of commentary on Seamap. Relative to the Polarcus deliveries of high revs, potentially contributing but we see some decline in that although the mix of business changes. What's the trend in direction on the margins there?

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

Question: Pierre Conner - Capital One Southcoast - Analyst : Yes but off of very high levels.

Question: Pierre Conner - Capital One Southcoast - Analyst : I understand. 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: Pierre Conner - Capital One Southcoast - Analyst : I understand. And then, the follow-up is of other international opportunities, some companies have discussed other Middle East activity. And so, my question, Billy, what are you hearing? What is your interest level?

Question: Pierre Conner - Capital One Southcoast - Analyst : I understand.

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. All right, thanks for letting me back in. Thank you, gentlemen.

Question: Veny Aleksandrov - Pritchard Capital - Analyst : Good morning. I'm sorry, I had some problem getting in the queue. But I have two short questions. In the past, you've talked about your revenues expectations for the Polarcus job. And now, that they're going to postpone two of the six vessels, does this mean that we have to defer 1/3 of the revenue expectations? 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: Veny Aleksandrov - Pritchard Capital - Analyst : Roughly correct? Okay. And then, my other question is about the North American job, while it is very impressive and you talked about growing through Q3, can we expect any extensions of this contract?

Question: Veny Aleksandrov - Pritchard Capital - Analyst : Very impressive here on the last [quarter]. Thank you so much. Again, I'm sorry for the delay.

Question: Terese Fabian - Sidoti & Company - Analyst : Thank you. Just a quick question on the Royal Australian Navy contract. You said that there could be $1.5 million follow-up. When would that begin? Is that sort of a sure thing?

Question: Terese Fabian - Sidoti & Company - Analyst : And what's involved in the sales there? What kind of equipment?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. What's involved in the service?

Question: Terese Fabian - Sidoti & Company - Analyst : For vessels that you built.

Question: Terese Fabian - Sidoti & Company - Analyst : And so, that could also be a recurring periodic?

Question: Terese Fabian - Sidoti & Company - Analyst : And how long would that $1.5 million extend for, 12 months?

Question: Terese Fabian - Sidoti & Company - Analyst : Two years? Okay thank you very much. That's it.