Greetings and welcome to the Mitcham Industries First Quarter Fiscal Year 2017 Conference Call. At this time, all participants are in a listen-only mode. A brief 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, Mr. Jack Lascar. Thank you, you may begin.

Thank you Melissa a good morning and welcome to the Mitcham Industries fiscal 2017 first quarter conference call. We appreciate all of you joining us today. Your hosts are Rob Capps, Co-Chief Executive Officer and Chief Financial Officer; and Guy Malden, Co-Chief Executive Officer and Executive Vice President of Marine Systems. Before I turn over the call to management, I have a few items to cover. If you would like to listen to a replay of today's call, it will be available for about - approximately 90 days via webcast by going to the Investor Relations section of the company's website at mitchamindustries.com or via a recorded instant replay until June 23. Information on how to access the replay was provided in yesterday's earnings call. Information reported on this call speaks only as of today, Thursday, June 9, 2016, 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 and 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, 2016. 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 now like to turn the call over to Guy Malden.

Thanks, Jack, and good morning, everyone. We would like to thank you for joining us today for our fiscal 2017 first quarter conference call. I'll begin by making some general comments about the quarter. Rob will then discuss our financial results in more detail and address our market outlook. We will then open the call for questions. Turning now to our first-quarter results. Overall, the first quarter unfolded much as we expected. Our Equipment Manufacturing and Sales segment produced improved results over last year's first quarter, thanks to steady results from Seamap and the addition of Klein Marine Systems. Results from our Leasing segment were significantly below last year's first quarter, due in large part, to very low levels of business in Canada and Russia this winter season. However, with the recent recovery in oil prices, the seismic market seems to have stabilized and we are seeing indications of renewed activity later this year and into next year. In the Equipment Leasing business, we continued to manage through an extremely challenging environment, as E&P companies and contractors remain heavily focused on preserving their cash flow and minimizing their expenditures in the face of this extended downturn. Our Leasing revenues were down both year-over-year and sequentially, as seismic exploration activity continued to languish through the quarter. While the weakness in activity was pervasive throughout all geographic markets, we did see a substantial sequential increase in revenues in the US due to a large Alaskan program that has since been completed. However, we continue to see very little exploration activity in the US land market and this situation is likely to continue until a more favorable and predictable commodity price environment prevails. Continuing the trend we discussed during the fourth quarter, we did not experience the usual seasonal benefit from the Canadian…

Thanks, Guy. I'll give you a bit more detailed review of the financial results and then I'll make some comments about our view of the current and then near term market outlook as well. First, let me go over the lines of business within our Equipment Leasing segment, which includes the leasing business itself, sales of lease pool equipment and some additional miscellaneous equipment sales. The revenues for this segment, as a whole, totaled $4.5 million in the quarter compared to $11.5 million in the first quarter a year ago. There was activity reductions in nearly all areas of our Leasing business, although as Guy mentioned, our US Land business did see the benefit of large projects which has since then been completed. Though the visibility in the Leasing business is still poor, based on inquiries and pending project bids in selected markets, we think the second half of the year has the potential to improve versus the first half. The improvement will likely come from Europe and Latin American markets, as those two areas are showing some incremental opportunities. For our Lease Pool Equipment sales, revenues were $906,000 in the quarter compared to $227,000 in the same quarter last year. New Seismic Equipment sales, which include miscellaneous seismic equipment that, I'll remind you no longer include the sales from SAP, our Australian subsidiary were just $29,000 compared to $130,000 in the same quarter a year ago, and we do believe there may be opportunities to sell certain lease pool equipment later this year. We now turn to our Manufacturing Equipment Sales segment, which includes Seamap, Klein and the product sales from SAP. Revenues for this segment, as a whole totaled $7.2 million in the quarter compared to $5.7 million in the first quarter year ago. Seamap revenues were $4.9…

Thank you. [Operator Instructions] Thank you. Our first question comes from the line of Tyson Bauer with KC Capital. Please proceed with your question.

Good morning, gentlemen.

Good morning, Tyson.

Can you provide a little additional color with kind of the sales cycle and lead times that are involved with Klein and some of your non-oil and gas leasing projects that are more military or other industry oriented? Is there a normal budget cycle and a normal, where you can see a pretty good lead time of what's out there to bid on and to procure those contracts?

There is, as you can imagine, with many governmental customers, you do have a longer business cycle or longer…

Project cycle…

Yes. And so you do have long-term visibility. There are issues about exact timing as to when things are actually released and when deliveries occur. But you do have much longer-term visibility in industrial projects and so many of these are ongoing projects.

Multi-year projects with standard products, including a couple of new products that we are introducing.

Okay. So when you give the positive outlook for '17 and '18, that's because a lot of those things are ready existing and in the pipeline. These aren't things that we are hoping to see; these are things in existence?

That's correct.

That's right. We may not have a purchase order in hand, but the projects are underway and ongoing.

You made a comment about the possibility of some lease pool sales give you a net working capital benefit, as I'm guessing your CapEx will be de minimis this year any kind of magnitude that you're looking for, a benefit that would help your liquidity throughout this year on recognizing and turning that into cash some of those inventory amounts?

I think Tyson, we're always looking for opportunities to do something with that. I think I'm reluctant to give you any specific targets on that because those are - tend to be opportunistic. But again, we do think there are opportunities out there, part of it - they are a bit limited but we think they are there.

Okay. And last question. When you did your debt pay down, was there an adjustment to your available credits that corresponded with that pay down, or do you still have the existing $25 million?

There are - there's no - with the pay down, there is no adjustment, although we are considering looking at the total commitment as to what we can likely utilize. And so we may make an adjustment there just to save commitment fees.

Okay. Thank you.

No real practical effect is the answer.

Okay.

Thank you. [Operator Instructions] Thank you. Our next question comes from the line of Sam Rebotsky with SER Asset Management. Please proceed with your question.

Yes. Good morning, gentlemen.

Good morning.

With the difficulty that has occurred with the price of oil and the significant improvements and the rig count has been significantly lowered and having raised the capital, even though you want to raise additional money, do you see - what kind of visibility do you have where today, you might need to raise additional funds, this at one year, two year, what is your comfort level on the ability to hold capital and utilize it going forward?

Well, Sam, I think, we don't see needs for additional capital as we sit here today. If any needs for additional capital, I think, would be to take advantage of opportunities that might take down the road. So we're cash flow positive, so we don't have a cash burn issue to deal with, like many people do. So I think we're pretty comfortable with where we are and just think there are some opportunities out there and they are going to continue to look for those.

And do you see a certain minimum revenue to breakeven on a profit - basically, on a profit basis, not on a cash flow basis and do you see when that may occur?

I guess I'm just reluctant to make a projection about that. I mean, clearly, you can do the math from the income statement looking backwards. We are taking a number of steps, have taken and continue to take a number of steps to control costs and rationalize the business. I guess just reluctant to make a projection on that.

As far as the current quarter and as far as a normal quarter, what do you see as the best quarter based on past history and future, the fourth, the third, the second, the first, what do you see where the quarter is going forward what they might…

That's a good question because historically our fourth quarter - first quarter then our fourth quarter were our two best quarters because of seasonal issues in the leasing business in Canada and Russia. This year, we haven't seen that seasonality. So I think the normal seasonality we've seen historically, I think is not going to repeat itself this year. So there is no set seasonality that we see in the business for this year. So you really can't - as we said earlier, we think the back half of the year is better - going to better in our Manufacturing and Equipment Sales business due to order flow, but that's not really due to any seasonality.

Okay. And do you say - as oil is, say in the $50 range, if it's say gets to 60, do you see that being significant, in other ways more increase - I mean, there is going to be more increase in your utilization of your equipment than - and exploring. But is there a certain number that you see that would - should permit you to sort of be over the hump, so to say?

Well, I mean, the price of oil is important because it impacts the investment decisions of oil and gas companies. That's the real driver. So just because oil gets to 52 or 55 or whatever that, in and of itself, doesn't directly relate to us. But if that gives the oil and gas companies more confidence and more ability to go explore, than that definitely is to our benefit. So it's an indirect effect.

Okay. And as far as opportunities, are you looking at anything now or are you waiting?

Well, we're always on the lookout for things. We think there are some opportunities that are going to become available. So we're always looking, but nothing that's eminent.

Well, good luck.

Thanks, Sam.

Thank you. Ladies and gentlemen, there are no further questions at this time. I'll turn the floor back to management for final remarks.

Thanks, Melissa. I would like to thank you for joining us for our call this year and for your interest in Mitcham. We look forward to talking to you again at the conclusion of our second quarter. Thanks.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.