Mitcham Industries, Inc. (MIND)

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Mitcham Industries, Inc. (MIND)

F2Q09 (Qtr End 07/31/08) Earnings Call Transcript

September 9, 2008 10:00 am ET

Executives

Jack Lascar – IR, Dennard Rupp Gray & Easterly

Bill Mitcham – President and CEO

Rob Capps – EVP, Finance and CFO

Analysts

Terese Fabian – Sidoti & Company

Pierre Conner – Capital One Southcoast

Luisa Hermann – Dahlman Rose

Tyson Bauer – Wealth Monitors Incorporated

Tamara Manoukian – Greenwood Investments

Greg Hillman – First Wilshire Securities Management

Presentation

Operator

Good morning, ladies and gentlemen. Thank you so much for standing by, and welcome to the Mitcham Industries’ second quarter earnings conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions) As a reminder, this conference is being recorded today, on Tuesday, the 9th of September, 2008. I’ll now turn the conference over to Mr. Jack Lascar of DRG&E. Please go ahead, sir.

Jack Lascar

Thank you, Michael. And good morning, and welcome to the Mitcham Industries’ fiscal 2009 second quarter conference call. We appreciate all of you joining us today. Your hosts are Bill Mitcham, President and Chief Executive Officer; and Rob Capps, Executive Vice President and Chief Financial Officer.

Before I turn the call over to management, I have a few items to cover. If you would like to be added to the company's e-mail distribution list, please call DRG&E's office at 713-529-6600 and relay that information to us, or you can send me an e-mail with that information at jlascar@drg-e.com. If you would like to listen to a replay of today's call, it is available via webcast by going to the Investor Relations section of the company's Web site at www.mitchamindustries.com or via a recorded instant replay until September 17. Information on how to access the replay was provided in yesterday's earnings release.

Information reported on this call speaks only as of today, Tuesday, September 9th, 2008, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay.

Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC including in its annual report on Form 10-K for the year ended January 31, 2008.

Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday, and please note that the contents of our conference call this morning are covered by those statements.

I would like to turn the call over now to Mitcham's President and CEO, Bill Mitcham.

Bill Mitcham

Thanks, Jack, and good morning, everyone. And thank you for joining us today. I’ll discuss our fiscal 2009 second quarter results.

We have a solid second quarter driven by ongoing strength in our core leasing business. I’ll mention some of the highlights of the quarter, and turn the call over to Rob, and then – to discuss the financials. Then I’ll get back for some closing comments.

Our seismic equipment leasing segment turned in another solid performance, with revenues increasing 20% over last year’s second quarter. We continue to add new seismic equipment to our lease pool due to strong customer demand. In the first six months of this fiscal year of 2009, lease equipment additions totaled approximately $20 million, with $13 million added late in the second quarter, and not contributing materially to leasing revenues during the second quarter. During all of fiscal 2008, we added $26 million in new lease pool equipment.

Second quarter EBITDA was strong, increasing 19% from the second quarter a year ago.

As expected, revenues in our Seamap segment declined from the second quarter a year ago. The sell of Seamap products was generally – about generally not impacted by seasonal factors, and can vary significantly from quarter to quarter due to customer delivery requirements. And as we’ve stated several times in the past, we expect Seamap revenues to be stronger in the second half of this year than the first. More importantly, as on the first quarter, we saw year-over-year improvement in gross profit margin in our Seamap segment.

Our Australian subsidiary, Seismic Asia Pacific, or SAP as we call them, received their first major contract to provide equipment to the Royal Australian Navy.

And finally, approximately 78% of our total revenues in the quarter were generated from international customers as we continue to extend our geographic diversification. We firmly believe we’re very well positioned to benefit from this period of strong and sustained growth in the worldwide seismic market.

Now, I’ll turn the call over to Rob, our Chief Financial Officer, who’ll give you a detailed review of our financial results.

Rob Capps

Okay. Thanks, Bill. Good morning, everyone. I’ll review the second quarter operative results in greater detail. And then make a few comments about our financial position.

Total revenues for the second quarter were $17.5 million. That compares with $15.4 million a year ago, and that’s a 14% increase. But due to customers permitting issues, which continue to impact the seismic industry, some leasing jobs were delayed in the second quarter. Now this, of course, has a negative impact on the raise in the revenues in the quarter.

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