Greetings and welcome to the Mitcham Industries’ Fiscal 2016 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. Jenny Zhou. Thank you. You may begin.

Thank you, Jessie. Good morning and welcome to the Mitcham Industries' fiscal 2016 second quarter conference call. We appreciate all of you joining us today. Your hosts are Guy Malden, Executive Vice President of Marine Systems, and Interim Co-COO; and Rob Capps, Executive Vice President, Chief Financial Officer and Interim Co-COO. Before I turn the call over to management, I have a few items to cover. If you like to listen to a replay of today's call, it will be available via webcast by going to the Investor Relations section of the company’s website at www.mitchamindustries.com, or via 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, Thursday, September 3, 2015; 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, 2015. 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 these statements. Now, I would like to turn the call over to Mitcham’s Executive Vice President of Marine Systems, and Interim Co-COO, Guy Malden.

Thanks, Jenny, good morning everyone. Also present this morning is Bill Mitcham, our Chief Executive Officer. We would like to thank all of you for joining us today for our fiscal 2016 second quarter conference call. I’d like to begin by reviewing the performance of various parts of our business during the second quarter. Rob will then discuss our financial performance and will conclude with a discussion of our market outlook. Then, we’ll open the call for your questions. Turning now to our second quarter performance, as we had expected, our leasing business showed significant year-over-year declines due to the very challenging industry conditions. However, revenues from our Seamap segment were much less than we anticipated due to unexpected shipment delays. Specifically, roughly $6 million worth of orders were delayed into the third quarter. As a result, sales from Seamap were a fraction of what we had expected, although we should see the full benefit of these orders in our third quarter results. In our leasing business, the seismic market continues to be impacted by low exploration activity and overcapacity in the seismic acquisition business. Low commodity prices and uncertainty have caused E&P companies to focus on preserving liquidity and cash flow and therefore reducing exploration spending. These factors negatively impacted our second quarter results beyond the seasonal pullback we’ve historically seen in our second quarter. Now, looking at our various geographic markets, we saw pervasive weakness in land seismic activity throughout the Western Hemisphere. The US remains a very tough market as the overcapacity issue is particularly pronounced here, and although there is some work going on, it is at a much reduced level. As we mentioned during our prior call, Canada continues to be impacted by dramatically lower activity, although we normally see a big drop off in…

Thanks, Guy. Good morning everyone. I’ll start by discussing the top line of each of our two segments, equipment leasing and Seamap, and then followup with the discussion of the profitability of each of these segments and then conclude with a discussion of our consolidated results and our financial position. First, let me review our equipment leasing segment. Our leasing revenues in the second quarter were $4.5 million, down 45% from last year’s second quarter and down 60% sequentially. As Guy touched on earlier, our year-over-year decline was driven mostly by weak results from Latin America. Both with the exception of Russia and Europe, all of our geographic regions were down over that period due to lack of exploration activity and equipment overcapacity. Our marine leasing business was up both year over year and sequentially, despite the fact that it remains a good dealor equipment available with the continuing consolidation within the industry. Nevertheless, we continue to experience some uptick in inquiries for the rental of marine equipment. Sales of leasable equipment were at $172,000 this quarter compared to $1.3 million in the same quarter last year. Other equipment sales, which excludes heli-picker equipment as well as sales from SAP, oceanographic, and hydrographic equipment, were $633,000 compared to $2.3 million in the same quarter a year ago. Now, let me turn to our manufacturing business, Seamap. Revenues were $2.3 million compared to $7.7 million in the second quarter of last year. As Guy mentioned, three orders that were originally scheduled to be delivered during the second quarter slipped into the third quarter due to a variety of reasons. We did see sales in other products and aftermarket services such as spare parts and repair work, however, that business has been negatively affected by the generally weak environment in the industry.…

[Operator Instructions] Our first question is coming from the line of Ross Demont with Midwood Capital.

The $6 million of deferred Seamap revenues, should we infer from that that we’re going to have a $6 million a quarter, next quarter in Seamap, whether it’s $6 million on top of normal order rates for Seamap?

$6 million on top of the viable order rates.

And then the increase in Australian subsidiary, can you just give a little bit more – maybe quantify that a little bit more?

I think last year we did around $8 million or so of [indiscernible] at that levels this year, slightly below that, as you can see, it’s been very minimal in the first half of the year. Safety orders probably has been backend loaded , those are sales to governmental licensees and things of that nature. So that it just tends to...

Asia Pacific.

Yes.

[Operator Instructions] Our next question is coming from the line of Georg Venturatos with Johnson Rice.

Just one or two, actually touch on Seamap as well, you talked about the deferred shipments that we’ll see in 3Q that didn’t hit the second quarter, you talked about the additional shipments as well in the back half of the year, was there anything incremental that we got in the quarter, sorry if I missed this, beyond what we talked about last quarter in terms of expectations for system deliveries?

No, there’s not, Georg.

And then thought it was interesting, you also saw the opportunities for equipping some new and reconfigured vessels, anything further you can talk about there in terms of timing or what’s kind of changing in terms of the environment and willingness to see some of your equipment use there?

Georg, there are some things that we had scheduled on hold still coming out. We don’t have a tremendous amount of visibility into next year, obviously, but things are continuing to track as we had expected from our last call.

I think, Georg, we’re seeing some potential opportunities in some markets, again mainly in the Eastern Hemisphere for some additional vessels or equip some additional vessels, I’m not implying there are new builds necessarily. So early days, we’re a little bit encouraged that there is some activity out there.

And then last one from me, you did mention Canada, at least early indications not encouraging, any kind of quantification you could even guess at this point in terms of what we might see year over year or how you see that season shaping up at this point?

It’s tough to say, of course, we had minimal activity in Canada last winter. So I just can’t see it much better from what we’re seeing right now. That can always change, of course, pretty quickly, but based on the inquiries today the projects that we know are planned, there just isn’t a lot going on up there. Not that there's nothing, but just not enough to generate much demand.

And I guess last one, Rob, probably better for you, on expectations second half from an operating cash flow perspective?

I think we’ll see – it should be positive, I think, you've got to kind of do the math from where we were in the first quarter. We did some operational improvement, also generation of cash flow from inventory, because the $6 million in orders that’s being shipped or essentially finished, so we’ve got an inventory build that you'll see in the balance sheet that we should liquidate, if you will, in about half a year. I think we’ll still be positive.

The next question is coming from the line of Veny Aleksandrov with FIG Partners.

My first question is on Seamap, without going into details that you might not want to go into, the two contracts that were delayed, was it operational issue that the clients were not ready or was it from [indiscernible] issues?

It’s all operational issues, Veny, without going into much detail, they’re going on to new vessels and just want at the site rate to take on equipment.

Sounds like that needed more time, it does not [indiscernible]. And in terms of Russia, you said that you have early indications, and I understand how early it is, and it’s just indication about how you – based on these invitations, do you see a normal winter or how much stronger than last winter or very stronger?

I think we see the potential for it bit stronger than last year.

And how many channels do you have in this market right now?

It’s a moving target [indiscernible] address that specifically right now for competitive reasons.

It appears we have no further questions at this time, so I’d like to turn the floor back over to management for any additional concluding comments.

Okay. We want to thank you once again for joining us on our call today. Great to have Bill back with us today. And we look forward to talking to you going after the conclusion of our third quarter. Thanks.

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation and you may disconnect your lines at this time.