Mitcham Industries Q4 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, Bill, Rob.

Question: Pierre Conner - Capital One Southcoast - Analyst : First questions are around lease pool results and activities. So can you give us a feel for where we are on channel count and I know that's a bit apples and oranges in there, now that we have some digital DSU units, et cetera, but just roughly kind of what's our channel count now? 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 I know this is again another rough number, but we've spoken in the past about the utilization and I'm sure that there in the fourth quarter with the transition off of the rocky chute it was choppy, but where do you think that ends up in the first fiscal quarter of 2011 in terms of utilization? We've spoken of 40 to 60% sort of in the past.

Question: Pierre Conner - Capital One Southcoast - Analyst : Okay. That's fine. All right. So, now, on the direct cost side of that, so the direct margins, if you will, were some of the lower that we've seen. Again, I would expect that we were transitioning a lot of equipment, you mentioned specifically the importation costs. So once we moved that equipment internationally, the digital sensors, is there anything different in the mix or can we expect low to mid-90s cash margins in the leasing business?

Question: Pierre Conner - Capital One Southcoast - Analyst : Going with the additional steerable streamer margins changing that one way or another.

Question: Pierre Conner - Capital One Southcoast - Analyst : This is helpful. One last one on the Seamap and I'll cycle back. So we had a great -- looks like a great 2010 in Seamap and you mentioned having a very strong 2011 in Seamap and so to the extent that we could talk a little bit in rough numbers around did the backlog -- we delivered the last REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. ones at Polarcus. Is the backlog half of where it was last quarter? Were we able to hold it? And give us some feel for -- you mentioned 2011's stronger and I think that's sort of an overall basis but where does Seamap sequentially go next -- I'm talking about the year. Not trying to get a quarter.

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

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

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

Question: Pierre Conner - Capital One Southcoast - Analyst : That's helpful. I'm going to let some other folks run through and I appreciate all the help and perspective and if there's anything I'll follow up in the queue again. Thank you, gentlemen.

Question: Terese Fabian - Sidoti & Co - Analyst : Thank you and good morning. I had a question on Russia. You said in the last conference call that bidding activity was up in Russia. What percentage or what -- how many of the contracts did you actually win and how does it compare with last year? And can you talk a little bit about the market there or how many channels are you shipping in? Are they going east or west or north, Siberia? And what is the outlook there for the first quarter?

Question: Terese Fabian - Sidoti & Co - Analyst : That was one question.

Question: Terese Fabian - Sidoti & Co - Analyst : Okay. Well --

Question: Terese Fabian - Sidoti & Co - Analyst : Okay. Well, thank you. That was a good answer to my question. Another question on the down hole seismic, the VSP system. What kind of utilization are you seeing there and is that -- I think you said before that that was used outside of North America also last quarter. Is that still true? 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 : Okay. Did you have an international presence with down hole tools?

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

Question: Terese Fabian - Sidoti & Co - Analyst : And what kind of feedback are you getting on that from the contractors? 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 : Okay. Thank you. I appreciate that. I'll queue back up.

Question: Veny Aleksandrov - Pritchard Capital Partners - Analyst : Good morning, guys.

Question: Veny Aleksandrov - Pritchard Capital Partners - Analyst : I have a question on the AES acquisition. How is the integration going? Is the equipment in your hands? Have you started marketing it? I know most of the clients are already your clients so how is this happening?

Question: Veny Aleksandrov - Pritchard Capital Partners - Analyst : Okay.

Question: Veny Aleksandrov - Pritchard Capital Partners - Analyst : And your interest within leasing most of it, right? You still have some sales but the lease is going to be your primary focus.

Question: Veny Aleksandrov - Pritchard Capital Partners - Analyst : Okay. And then my other question is on North America land. There are a lot of moving parts there but -- and you're commenting that it's still a weak market for you, but is the standardization of the gas around $4, $4.50 going to help? Do you think you're going to see at least some pick-up or it's really dead right now over there?

Question: Veny Aleksandrov - Pritchard Capital Partners - Analyst : Are there -- apparently there is some interest and some activity going on. Are you seeing that translate into business for you.

Question: Veny Aleksandrov - Pritchard Capital Partners - Analyst : Okay. Thank you so much.

Question: Ross DeMont - Midwood Capital Management - Analyst : Good morning, guys.

Question: Ross DeMont - Midwood Capital Management - Analyst : Rob, quick question for you. Looks to me like receivables are a little high relative to payables, just looking at historical relationship. Is that a correct assumption? Is there some extra cash we'll see come out of working capital in the next couple quarters.

Question: Ross DeMont - Midwood Capital Management - Analyst : Okay. And then the $35 million in Equipment Leasing revenues we made last year, I mean, does that sort of form a baseline going forward? And I'm not trying to get specific guidance, I'm just trying to understand, there were so many headwinds in the fiscal 2010 year. Is that kind of as bad as it can be?

Question: Ross DeMont - Midwood Capital Management - Analyst : That's fair enough. If I look at your -- the absolute dollar amount associated with your seismic lease pool, it really hasn't changed much year-over-year, both around $65 million. Can you talk a little bit about the mix in that lease pool? Because I think to an outside observer we're looking at the same dollar amount but I'm assuming we're getting a shift away from the commodity channel, into more specialized tools, is that a fair assumption.

Question: Ross DeMont - Midwood Capital Management - Analyst : Okay. And last question, given that we have I'll say roughly $9 million in net debt, given where CapEx is setting up for this year and cash coming out of working capital and just cash coming out of operations, should we assume the net debt numbers will come down.

Question: Ross DeMont - Midwood Capital Management - Analyst : Thanks for taking my questions. I appreciate it.

Question: Bo Mckenzie - Global Hunter Securities - Analyst : I know this may be a little ways off, but if you look out there at some of these shales that are showing up in Europe that people like Exxon and Totale and so forth are talking about drilling, what's going on to date with seismic activity and what kind of companies and equipment are in those markets like eastern Germany, and I guess it's all Germany now, but Poland, places like that right now? Do you see opportunities rising over the next couple years to perhaps move stuff out of Russia into those markets or to set up a lease pool over in that market or what?

Question: Bo Mckenzie - Global Hunter Securities - Analyst : And on that front, Bill, if you look at the average seismic Company that's serving eastern Europe, I mean, that's not an area ever paid attention to. Are they equipped comparable to what you would find here in the west or are they -- is it just kind of a niche market that's never really been served very heavily.

Question: Bo Mckenzie - Global Hunter Securities - Analyst : It will be fun to watch. Thanks.

Question: Zach Glesser - ENK Partners - Analyst : My question was actually asked and answered. Appreciate it, though.

Question: Terese Fabian - Sidoti & Co - Analyst : Hi, thank you again. Question on Seamap. A good backlog you have at the start of this year without the Polarcus orders, and it looks like in the fourth quarter you had a large amount of spare parts and services in that number that you reported. Is that correct? Or did you have other GunLink or BuoyLink sales in there?

Question: Terese Fabian - Sidoti & Co - Analyst : Okay. And you had talked before about GunLink Light product or upgrades from 2000 to 4000. Is any of that in your backlog for the coming year? Or are they just -- ?

Question: Terese Fabian - Sidoti & Co - Analyst : And what does the 4000 give you that the 2000 doesn't have?

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

Question: Terese Fabian - Sidoti & Co - Analyst : Good morning.

Question: Terese Fabian - Sidoti & Co - Analyst : And is there a limit on how many streamers that can be used on?

Question: Terese Fabian - Sidoti & Co - Analyst : Okay. And I would guess the movement in Marine is the same as in land that you would go for optimally high resolution?

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