Mitcham Industries Q4 2008 Earnings Conference Call Transcript

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

Question: Neal Dingmann - Dahlman Rose - Analyst : Outstanding quarter, fellows. Good morning. Bill, could give a little more color? You give good color on both sides, the lease -- the Seamap. I was just wondering if you could give a little color on the leasing side. You've obviously -- I would call it aggressively added channels. Break down a little bit what you see (technical difficulty) market going forward. We hear a lot from Russia, what you have going there. Do you see both domestic regions -- what do you have -- I guess give me an idea what you have going on in North America, including Canada, as well as some international regions, what you kind of see in your crystal ball going forward. Is it still as good as, I guess, I perceive it is? 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 - Dahlman Rose - Analyst : Does that include international? How big can Russia get, Bill?

Question: Neal Dingmann - Dahlman Rose - Analyst : Okay. Now, last question. You did give good color on sort of your forecast for Seamap. I was trying to, I guess, sort of look at my model. Can you give me an idea, Bill? It looks like you are sort of comparing on the growth rate four quarters to five quarters. Give me an idea, I guess, what was the rationale behind a little more on the revenue side. Obviously, margin seemed to be doing quite well. Give me an idea, sort of on an apples-to-apples on the revenue side, if you could.

Question: Neal Dingmann - Dahlman Rose - Analyst : Okay, perfect. Thanks, guys. Good work.

Question: Terese Fabian - Sidoti & Company - Analyst : I have a question on your other equipment sales; that number popped up to about $7 million for the quarter. Who are your customers that you are doing this with? Is this sort of something that you would expect to increase as you increase your equipment leasing customer base?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay, and the margins on that are lower margins. Is that correct?

Question: Terese Fabian - Sidoti & Company - Analyst : Is there activity in what is happening in Australia with your work there, your subsidiaries? One hears a lot about offshore exploration and production activity going on there.

Question: Terese Fabian - Sidoti & Company - Analyst : Okay, I will queue up. Thank you.

Question: Megan Bissell - FIG Partners - Analyst : Actually Terese stole my question, so I am all set. Thanks so much.

Question: Pierre Conner - Capital One Southcoast - Analyst : Good morning, gentlemen. Good results. On the lease pool side, do you have any more equipment scheduled to be -- any more channels scheduled to be delivered? Or did you take -- basically you have what was ordered has been delivered here? --

Question: Pierre Conner - Capital One Southcoast - Analyst : What kind of magnitude of channels do you have coming in next month? Are we just talking about a couple thousand channels?

Question: Pierre Conner - Capital One Southcoast - Analyst : Leading into -- and this is just like an E&P Company -- the CapEx will depend on where you see the demand -- but what do you think that you'll spend in fiscal '09? 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. And I guess the kind of -- on the new channels coming in, where your leasing rates are are still in line with your expectations of a payback. Just remind us -- granted that you would continue at rates if they were to continue renewal on the rental, this would be something you would expect -- these are 18-month payout on new channel count coming in?

Question: Pierre Conner - Capital One Southcoast - Analyst : We did get the benefit of the winter uptick here some in this quarter, given the end of January, but we had a few more months. The breakup has not occurred here just until recently. So sequentially, you have new equipment coming in; that is one moving part. But are we still within the last quarter getting the benefit of the winter activity just now beginning to taper back, or what is the timing on that? Help us on that.

Question: Pierre Conner - Capital One Southcoast - Analyst : I understand. And I know you're giving us only revenue guidance for the full year, and of course I'm trying to make sure to put that seasonality in there.

Question: Pierre Conner - Capital One Southcoast - Analyst : You bet. All right. I do have some more, but that was my leasing questions. I will come back and requeue for Seamap, so I'll see if there's someone else in the queue. Thank you. 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 & Company - Analyst : This concerns GunLink and the competitive outlook. I heard that there was some sort of a pause in the delivery of marine seismic vessels in the first half of '08, picking up later on and going stronger into '09. What is the competitive market outlook for your GunLink productlines, seeing what's happening here? You are guiding for sort of flattish year-over-year. But if you are looking at the broader market, your competitors, and even buying GunLink products for leasing out again, how does that look to you? I think that is two questions.

Question: Terese Fabian - Sidoti & Company - Analyst : And that is through 2009, more or less?

Question: Terese Fabian - Sidoti & Company - Analyst : Okay. And are you buying GunLink products for your leasing equipment segment?

Question: Terese Fabian - Sidoti & Company - Analyst : Do they play a greater part in the wide azimuth shoots that they're doing? Are they more used for that or just for regular shooting? 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 & Company - Analyst : Okay, that's good. Thank you very much.

Question: Tamara Manoukian - Greenwood Investments - Analyst : Great quarter. I have a couple of questions. One, I think last quarter or maybe a couple of quarters ago on the conference call you mentioned a possibility of establishing an office maybe in India or hiring someone over there and maybe just following the Russian model. Can you tell me what is the progress on those developments?

Question: Tamara Manoukian - Greenwood Investments - Analyst : Okay. And the equipment that you bought this year, this $26 million worth of equipment, how convertible is it to the equipment bought last year? Is it pretty much --?

Question: Tamara Manoukian - Greenwood Investments - Analyst : It's the same stuff.

Question: Tamara Manoukian - Greenwood Investments - Analyst : Okay, thank you.

Question: Pierre Conner - Capital One Southcoast - Analyst : Gentlemen, going back to Seamap, can you give us -- I think you were going to -- if you could give us an annual on the backlog. And I know it just depends on the visible deliveries. But what about the Seamap backlog, how does it compare?

Question: Pierre Conner - Capital One Southcoast - Analyst : Because you gave those early deliveries.

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. So you don't necessarily want to get into that. On the margins -- and I know we've got some improvement with the acquisition of the software licenses late last year that helped, and it was a nice improvement. But you're not all the way through the margin expansion that you would like to do, I suppose. How -- not in any kind of timeframe -- where can they go? Where can the margins at Seamap go?

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay, that gives us a bracket on that one. Follow-up on experienced equipment sales, we just continue to trend down. And so the question here year-end may be low amount of that. Was it -- I know it is opportunistically driven -- just not the opportunities or basically are we getting to that point in your lease pool where everything is in such condition and it is all in high demand and you just -- what is the balance? Is it opportunity or you don't really need to sell it because it is all in such high demand? 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 directionally, that could continue to trend down, for that matter.

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay, that is what we are looking there. Gentlemen, I appreciate also the clarity in the release with the margins, information on the various subsegments' cost data. Appreciate that. So, I'll turn it back. Thank you.

Question: Tamara Manoukian - Greenwood Investments - Analyst : Just a couple of follow-up questions. What was the margin on the Seamap?

Question: Tamara Manoukian - Greenwood Investments - Analyst : What was the gross margin on Seamap?

Question: Tamara Manoukian - Greenwood Investments - Analyst : What about in the fourth quarter? 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: Tamara Manoukian - Greenwood Investments - Analyst : 45%? So that includes the full impact of [Tango] sales?

Question: Tamara Manoukian - Greenwood Investments - Analyst : So there is some upside --?

Question: Tamara Manoukian - Greenwood Investments - Analyst : Okay, great. What is the D&A projection for the next year?

Question: Tamara Manoukian - Greenwood Investments - Analyst : Yes.

Question: Tamara Manoukian - Greenwood Investments - Analyst : But it is obviously going to be higher than this year, because --

Question: Tamara Manoukian - Greenwood Investments - Analyst : Okay, thank you.