IO - Earnings call transcript Q4 2018

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Operator

Greetings, and welcome to the ION Geophysical Fourth Quarter Earnings 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, Rachel White, Vice President, Corporate Communications. you. Thank Ms. begin. may you White,

Rachel White

you, operator. Quarter are to Fourth and us Good Earnings Conference morning, XXXX you welcome Call. today. ION's Thank We joining appreciate

President hosts As Executive Bate, and are X, on Officer. President Executive our Financial indicated Brian and Slide Vice Hanson, and Chief Steve Chief Officer; today

to turn over have few them, I Before call items a I the to cover.

on you our slides They replay call. are also a link We website, a call. accessible of page There today's will the to be of Relations accompany will using find iongeo.com. Investor via today's

any call Slide only XXXX, Moving Information advised may the on to replay. X. you of be therefore, of reported that X, on February longer this time-sensitive information at no speaks today, any are as accurate and time

by to I'll turn to will please please conference call, forward-looking our reports Slide this contents begin our this over on quarterly the in statements remind to predict materially call statements. from risks, certain this that Brian, with ION are risk the by note factors, differ begin, and cause Before Furthermore, yesterday, or our performance statements report statements, release are and include XX-K results or now and covered These results me that unknown we future are on we our SEC, to implied incorporated may many time call start filings the uncertainties time which expectations to based let call in and or expressed actual disclosed who uncertainties our X. risks during current disclosure and annual known which Form on press may issued from unable the Form the forward-looking constitute including those morning in performance of we on other of these our include made and refer any statements. as regarding or control, factors that by our you XX-Q.

Brian Hanson

everyone. our Today, operational our of our fourth target delivered We free morning, as and results new made good and higher XXXX for the objectives strategic diversifying return I If during bottom to into significant there year. on cover last expectations technology, We've them quarter Rachel, adjacent began commercializing Thanks, number business our strategy, programs, well and and met our imaging and sanctioned markets financial XXXX. raise as on addressed, over will highlights ocean topics like additional are our feel please multi-client our Q&A. XSea. you'd any progress

increased hoped. the year-end XX% discuss as activity & see and we let's up Services was strong XX% First, up financials. XX%. Operations year-over-year, though quarter revenues Optimization we fourth as didn't had Even E&P Technology was

with million how to EBITDA adjusted quarter quarter grew Our few ocean totaling the to cash, on total $X million turned the in liquidity the improvement, the million year. I'm are fourth of of the minutes. $XX We primarily $XX technologies, cable-based elaborate last year our generated Despite sequential bottom fourth quarter disappointed XX% were of associated which in will XXXX our $XX to increasing million. $XX for impairment in which we a There fourth items compared old of quarterly the special million, out. with

to further. conservative material sales exploration due to X key exploration and license Mexico million delay recent meetings announced Panamanians, discuss elections to Technology in of on our in million XXXX. year. out improvement after challenges pushed May. be the the our X% & round E&P $XX paused which now is flow in and regulatory and to to X-year that anticipated expectation the surrounding million by instated impacted were round Panama spending continue AMLO half Panama changing two on spending, $XX factors; with to companies $XXX last expected There were taking uncertainty in on investment. international moratorium XXXX geopolitical the and in Mexican presidential The spending back new in second acreage After license I'll AMLO continue office and segment E&P license no July of be data contribute was revenues in down E&P December, Services deals election, limited Mexico landscape. seismic the the in Our Based of be due Mexico. deal rounds previously a data presidential compared was spending to after geopolitical temporary year-end the will new half elected and

still companies was operators, While buy awarded we which cost risk and opportunities. wells resource. we XX companies' data where stakes farm previous to opportunities don't activity, developing with the blocks envision the administration, as have sales other strong the it of share and creates significant the blocks as been XX and drilling of see business being for among

the limited spending funds purchases, ultimately would continue over that and E&P latter but materialize. of customers for In cash remains modestly remaining as companies our didn't six year-end reserve third fourth quarter, all. the there year-end one significant spend into addition, and nine would indicated two the ION indicated clients the quarter global exploration the at didn't part spent really from funds to multi-client replacement. In there data, this Of spent be prioritize conservation materially,

an fourth muting likely during the from the in to oil closed prices slid The fourth we of $XX role the during progress. December negotiating a in had XX% year-end been already played in barrel, a spending. $XX deals alone, deals major While quarter, XX% quarter we're middle in these Brent which

by our also by pricing throughout of strong Picanha was While revenue program Mexico reimaging demonstrated sales Picanha maintain not out, but year. targets, Brazil. exceeding and ability our offshore commitments value we only our The Panama to from our the XD saw programs to pushed

beyond. revenue we line data, new the continue new expectations, results $XX investment million three Of benefit in the programs XD our XXXX We venture seven programs. XXXX, and our our were multi-client invested seven XD multi-client which our programs. and from were In and four from benefit data sanctioned to in multi-client should library majority with programs, sanctioned of multi-client programs generating reimaging in directly

XXX,XXX kilometers. year square data increased XXX,XXX XD from Our library XX% to this

focus projects. group on services better close Waveform We with collaborative nodal relationship in imaging increased great on developed higher maintained of position imaging our a workflows ocean awards million. backlog gave successfully We $X top-tier a the continued technology-driven projects services who Right algorithms direct Inversion type the imaging Full and by client January, advanced quarter this margins. and proprietary for Our three our after us work. with bottom by maturing value to of

deployments. Gator a In segment, revenue service our another addition, round increasing made work to vessels, to We with and providers. robust key and sales. One, more crew EBITDA contract services amount we was Our control command software outfitting Operations XXXX reservoir E&P ever largest up significant system are for ocean management of Gator well our adjusted an Optimization group's increased work. Gator in are the ever extended and positioned of ocean Advisors activity upcoming receiving assembling due bottom three two and involving Marlin XX assembled one -- years bottom largest the license

value vast debris portfolio a also the oilfield an completed with in navigate operations. congested the a from deployments alleged project, XX optimization significant to an the We costly deployments, Marlin a with our dispute coordinated the operational area, added second operational near office-based with and conflicts of offshore operations Marlin advancing And operations playback one the largest nowhere diverse downtime. resolved avoid studies of We sector. case accident. to by on doubled occur fishing installation XXXX array we our We operations associated adoption validating mobilized complex to in was helped in We producing and of for across new XXXX. where heavily headway to XXX feature another nearly crews insurance software. building Marlin made most accelerating proactively vessel large

wider remains Marlin revenue grow Marlin Marlin of more fully customers, application Marlin, available our and has the opportunities. featured the moved the to backlog web to virtualized deliver and million. to in $X delivery SaaS where a more is running a model, hosting take-up we already Service Our browser. cloud application a around field-based our and of office request under via The the scalable software increased Amazon fully and led software-as-a-service at cloud enable rapid continues Web to To

addition, significant traction incremental performance growth expect of continued to strength and seen vessel range that to million for million secured of near projects offerings devices to revenue SailWing in client, in alternative first SailWing, some the a has of improving bottom deployments. growing term. offshore pilot potential in supporting diverters. as translate source ultimately, and space, gain commercializing the We've new our technology the In conducting group recurring ports our especially revenues E&P to $X space. the a offset customers bulky to conventional This the in In of we're the decline an close marine the the into we harbors. E&P primarily management marketplace. we commercial be the lease oil-based high-margin week, I'm Marlin and seismic the ION, in $X associated outside to year innovative our and that outside Operations with new a selling opportunity first we area proud by supporting the We're services, protection of existing Optimization segment, of with ocean

is acoustic already our enables in distance we teams the optimizing generation navigation And In sold bottom users. believe our devices equipment remaining into work compass for commercialized next nodal initial its one the embarked the our our messages be projected diversify growing we potential base broaden are that in E&P continue Field to existing diver compass project of technology underwater. XSea, outside for a a provides XXXX. trials to for ocean provide value with use critical In existing addition, space. market OBS to GPS communicate military our as thresholds. elements We novel and precision expertise, since, to and we technology communication due diligently have production. system end customer markets. applications. our will to military Leveraging developing of second naval and exceeded adjacent communication XXXX, system, The largest our The on

the higher, long return we're more approach We broadly under a XSea believe service growing share this delivers. a term providers OBS technology commercial asset-led in the reminder, revenue to shareholders. number our recurring over components our value deliver the that As sustainable us more for offering will strategies to enable of

we diagnostics this The dramatically office. centralize seamlessly XSea month, be provide field and hold infield and of system. of unique expensive year, the very attachment. improve data the will the plan of has This the through in economics surveys automated provides Next integrated today's potential half first unique and delivered QA-QC back-deck in capabilities nodal the system our system second to and a proprietary to automation demonstration to in

allows technology a OBS This Lastly, SimSurvey with now. is minute-by-minute computer of operational model deployed being modeling survey motion and parameters. of optimize and to yielding multi-scenario costs customers early-adopter time complex projects

quarter, the million cable generation bottom ocean we sitting Calypso $XX VSO This shelf. prior wrote of equipment and on off

will technology up the advanced improve their With most opportunities work wrap technology, efficient over growing more to I'll turn We of then to number continue is look is and XSea a to quality plan strategy our operations. node-based of and the safety, This but walk financials, I'll no OBS to taking of to that, service much this longer to Steve us the the ourselves byproduct efficiency put of advanced through alternative. empower questions. as it simply with it the a providers before to for and evolution monetize to

Steve Bate

morning, good Brian, you, Thank everyone.

E&P total in Services revenues quarter fourth by our revenues Optimization segment, by $XX new XXXX. to segment fourth E&P a decrease ventures slight segment increased compared were XX%. were Our our of XX% quarter increased XXXX. our quarter & revenues Technology Revenues XX% our Services Technology from in the Operations our of fourth the million, & Within and up

revenues our was increase of continued a And control programs, Optimization our & segment, sales XXXX. Our sales bottom recently by and projects. data increase XX% services Operations primarily million, our to the hardware in in $X Optimization were nodal The The proprietary an revenues in Brazil. increases driven ocean imaging In due continued completed of increase million, the bottom quarter of data our were XX% was an system. of fourth and library command revenues were result increase revenues Gator services imaging library software $XX particularly increase in to imaging subscription-based ocean of revenues of our compared in up Services XX%. Software

by continues driven fourth replacement partially XX%, by activity. increased quarter the also revenues devices XXXX. and Our sales to by spares to our impacted reduced of Nevertheless, devices higher be streamer towed compared business

as either discontinue segment. bottom Technologies segments. for strategy discussed, we XSea as Integrated XSea be components fully individual in in we of integrated $X.XX a million $X revenues $XX licensing forward, Overall, As to crew on model. the a rather our per we XXXX. or is loss service quarter a will plan or ocean reporting from million share Ocean to quarter previously focused relevant compared fourth Accordingly, system or have other share technology And moving Bottom reported a as recorded the fourth than of the of the net loss $X.XX per net separate

items fourth special to in net Excluding $XX fourth $X.XX of adjusted or of both $X per compared the or in share in income diluted share quarter income million net $X.XX periods, diluted adjusted million was XXXX. per of the quarter XXXX

use market to to charge of our quarter the the cable-based million of systems of during our earlier, an and technologies. asset shift OBS limited we OBS Therefore, in prior-generation has a strategy fourth evolution Brian opportunities the recorded nodal XXXX. $XX impairment of As combination mentioned the

the Our $XX for year EBITDA from $XX bringing full adjusted compared million. cash to million fourth flows million EBITDA operation during cash was quarter year to quarter one ago, compared in collections Net our flows decrease The $XX the the financing quarter total in XXXX. we in investing fourth XX. $XX year. and cash the of should ago in $XX flows of first an million balance net of both the the of quarter in in activities, accounts last $XX and quarter million fourth receivables generated to This million the during $X to $XX cash was compared result quarter Including million fourth net increase overall compared the our increase increase year XXXX. million at our during in one result to was unbilled of XXXX December of receivables adjusted

one Brian. from $X end Our the increase an total million ago. fourth turn XXXX it million and I'll liquidity million from With quarter, at was a to year that, $XX $X of the September increase back

Brian Hanson

Steve. Thanks,

Court the I'd back that to a did ruled Appeals Patent out ours, in Circuit the like The not Patent in were Supreme that developments Supreme Act the get outlook Supreme Court's speaking Court This that lost foreign and the Federal they XXXX, arguments. were reading Supreme our the Circuit in June, the other sent few Federal categorically taken overturned decision for I past WesternGeco our Court applied Circuit under Federal not was of Court recoverable our up ruling ruled before of our profits profits that, the about the case. correct Before that to lost The to case. lost WesternGeco positioning precedent Court of consider was the in do profits had litigation. Act. minutes unavailable threw to The the case spend What by our case. some cases

could the have up that that should parties WesternGeco Court profits the been case, few to Office the the Circuits of together the some supported our press front jury void lost case patent issued decision has was Patent Trademark profits January have were been fighting and and in prior jury's most the four five before on never place. those if recent court profits years, claims for explained or the an award rested they in XXXX, the we've that the ruled other went was two Office. The fighting decision, the litigation lost of and Federal an we first front the XX, In ruled granted in lost the cannot one Court; recent process of profits. our stand of the fronts: inter them As In in award Circuit of called could that Trademark it an two underlying our filings decision was on case last invalid releases, any infringement were the that claims. because on we've in five review, fronts jury lost patents our administrative Federal found where the to joined have IPR, that award Supreme Patent most

the the found the So profits. Circuit opinion, were to Court the the establishes reinstated by Court our entitled if award remanded surveys also have claim lost back to trial new for case, lost be covered profits jury that In essential based. trial was District the that the the if profits on District lost by record to upon only we Supreme can went determine the must existing which the all up Court court Federal Federal that the technology Court held that patent same remaining to we Circuit way one a were the performing

that Circuit like issue of of be a wouldn't that I apportionment. to were new the are acquisition but one Federal a use The a of means able court's That's the will present of method of or in outstanding that our to very issue, issued also That which vessel that were we out topic. legal that I is are as than point other of in turns able any be we problems we this and in or in appropriate, litigation. that trial raised to the should is ongoing ruling the to briefly trial the part it between as steering that XXXX. Federal entitled further new any survey answer equity to particular about advance during would questions new will allocated to from to complicated not if attributable get be lines. WesternGeco compensable, any a very Court's thrust any processing that further for trial, arguments boat position a And confident streamers other remaining like lost not go kind myriad warrants profits going some seismic we ruling. when apologize the other covers it's we the data claim, to things not Circuit anything to it profits and be is on our the real on I'd a pleased WesternGeco. address with would that But think into go that I the I'm are present

that discussed, in XXXX there us expectations. of didn't As below year our I've a that the we were developments number foresee finish caused to

the by planning those period XX for are months. we warrants to So extend exercise

that be warrant in the to start weeks holders will to We reaching coming the process. out

Let's wrap up outlook for XXXX. with our

gas oil fundamentals and to be long-term unpredictable. spending and strong, While exploration near-term continues remain lumpy

growth cautious volatility of are near-term XXXX, continued a as spending E&P increase in We their late expect and growth prices 'XX 'XX. the evaluate price early X% into we following X% the the year in volatility to know this X% budgets. not potential customers XXXX budgets oil XXXX, don't until commodity in in and the in part quarter. for first may have especially in to on At backdrop spending going are impact projecting E&P the and Analysts know point, another

budgets However, will there up, early of overall our or be flat improvement. indications be that an are from so customers should

program. a Brazil, already XXXX, business. kilometer XX,XXX be indicator years. provide do anticipate few While intend currently Services XXXX. to increasing program our XXX,XXX significant E&P increase in subject levels new the of We've we not the to as sanctioned square improvement drivers to of new velocity venture offshore the commercialization we any in fourth reimaging square budget an expected. solid the In of Technology activity to E&P new phase program on the over number is best include growth into offerings improvement And in guidance, we XXXX bringing of XXXX XX,XXX group, Primary experiencing a will XD programs near-term remains benefit last us that our software increase of we our as developed sales XXXX, of compared our the materially Picanha kilometer & several business now a XXXX of the program pushed and venture sanctioned programs

program We an next Farofa, also in underexplored and Brazil a started weeks. program in a few second anticipate offshore area XD reimaging starting the

upcoming library offshore license XX to license is existing anticipated XXXX. round ION activity. our active program is or relevant positioned rounds well addition, for of In XX the in data

potential our businesses, and excel while such executing imaging port offerings In core strategies and our software to Operations returns. equipment segment, deliver Our Optimization higher Advisors we military and positioning E&P in management. to maintained services markets groups these adjacent are as our the

amount that turn through We for ION's With is contribute software technologies adjacent drive to markets new positively anticipate that, to the both the commercializing in growing also and XXXX. years and should of markets. business in five goal to operator a are nicely revenues we'll call our non-seismic core back We our significant Q&A.

Operator

a Rusch have of question the [Operator & Oppenheimer Instructions] with We line Co. from do coming Colin

Colin Rusch

Can multi-client that? a How little seeing point, enter bit a movement talk servicing think you you side? seeing drift At little this things and on lower. image we about as XXXX about you the bit should up you're any are

Brian Hanson

Yes. Colin, it's Brian.

On the number piece, of close a the were year. imaging post the projects we services awarded of just

$X our on side. So backlog increased has million that

imaging services or And multi-client the on been sanctioned number either strong. of So the we've a from that perspective, programs is a have board.

We level. expect this we'll over several actually year more conduct programs XXXX that

relative around expect flush our year The kind we're I'd end our did in arms at year. a to price the the trying of commodity now. the that budgets to CapEx good that pretty of any for of programs conducting drop now is customers, study and the we're unanswered right impact So question year get out the multi-client this

Colin Rusch

to there with with And costs that? then helpful. That's any super the going warrant associated is extension, be Okay. cash

Brian Hanson

No. It not. will

Colin Rusch

balance question just on perfect. the final sheet. Okay, And then the

cost As seeing look canning obviously, you the debt? XXXX to needs be at planning what that to are are to those there, with notes? you done of opportunities those urgent lower there's that nothing How you around do notes, approaching but

Brian Hanson

year. those of a still in three look full at notes, left life going That's to years a great something but that's Yes. We question. hard we're this take have

Operator

the the back questions to hand comments. like closing further to management no call in queue. for are I'd There

Brian Hanson

We our look our the first call. attend thank for taking forward conference to right, All you talking to you quarter time on to call.

Operator

conclude today's gentlemen, and Thank participation. this does you Ladies teleconference. for your

this time a at day. and disconnect You lines may have your wonderful

Ion Geophysical (IOGPQ) 8 Feb 192018 Q4 Earnings call transcript