MIND - Earnings call transcript Q2 2020

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Operator

Greetings, and welcome to the Mitcham Industries Second Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ken Dennard, Dennard Lascar, Investor Relations. Thank you, sir.

begin. may You

Ken Dennard

Good Industries operator. appreciate and to welcome of Thank XXXX morning second Mitcham today. fiscal joining We quarter the you you, us everyone, conference all call.

Officer hosts and Malden, Your Executive Executive Marine and President Officer Capps, Rob Co-Chief Co-Chief Chief Officer; and are Financial Guy of Systems. Vice Executive

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

release. going days it to the by you a call, recorded a available to until features how section on like Relations mitchamindustries.com the to XX. access telephonically September today's listen website will would via was the for of XX If earnings of replay be replay instant at in replay provided to Information webcast via Investor company's or yesterday's

call as no may of the September on you any only or therefore and replay reported of today, reading. XXXX, be advised of that sensitive Information are listening time accurate as X, this time Thursday, longer information speaks transcript

by that by Litigation based Reform me current XXXX. statements of include management's many of Securities let Private any begin, future may and this to forward-looking statements results the These within known the unknown statements uncertainties expectations other forward-looking may statements. to management differ from certain the remind Act we actual constitute performance call on during meaning those materially implied and and Before or you future company or is are made company's risks, expressed of unable control, the which factors, predict cause that and results or or performance

from call release refer as filings to conference we start forward-looking contents January morning the press these the Form time-to-time statements statements. please statement the include XX, incorporated are yesterday call, of by and note our annual our the XX-K ended this the risk for its SEC, covered in These please that XXXX. issued report regarding this disclosed also with its factors the uncertainties Furthermore, risks company on by and including year in in

Now, Malden. over the to to I turn Guy like call Guy?

Guy Malden

you like fiscal and XXXX would market results second I quarter. Rob in Thanks will we for Ken, everyone. second detail close thank and then joining outlook. our about address few good final by today making us and our comments begin We to discuss with call. financial for quarter I'll more conference questions. some general the morning, will for the open briefly a will comments call then our

me most second Examining roughly in results we Let year-over-year by being by Marine part performance product the basis, segment gains our leasing our improved start on in partially consolidated offset quarter observations. posted for revenues with year Technology declines the few prior the making a and rising a financial business. over X%

basis, by drop revenues was leasing revenue segment. the which sizeable contracted offset posted gains QX downside activity, from almost a sequential a impact levels, On entirely our driven but by in Technology Marine

leasing of Columbia, seismic remain isolated very continuous Eastern areas challenging, and there conditions Europe. be While Alaska, as opportunity within such to pockets

sequentially year-over-year. of Our the Product drove gains, most Marine and segment upside both Technology

received the and During orders MA-X. generation scan product systems, our side first SeaLink sonar quarter, the delivered our new we build for first second streamer next

in In whom a provide we addition, initial phase we also of services as activity a agreement SeaLink part completed for Mitsubishi support support repair the signed for XXXX. of early

new For expansion applications for to the new our of continue through Marine Technology opportunities Technology. segment, number a Marine see we of and customers

out. firm somewhat seen expectations, customers pace our the being pushed and in constrained of further availability, trail resulting also order upgrade decisions by we’ve capital However, become

global in to to more orders restricted addition in not Our tracked again overall source economic we’ve as projections with controller those particular orders postpone, have our seen of capital uncertainty. Seamap several due

these are still prospects note seen has the gone industry realization of through we’ve to year result the a been away but prospects have of the not probably that right conditions. despite like most pushed and to I the these as impairments, available,

this next either these potentially received, be or year could into we year. orders Now, believe, later

number So, we enquiries been we the in Marine have products. for fielding summary, remain our Technology enthusiastic the market overall health the of about of and

now Rob. turn me the And with call let that, to over

Rob Capps

Okay, thanks Guy.

As begin of I’ll comments detailed near-term by then our the our make financial usual, results, I’ll more market. some giving a about and on views review current

the year revenues from in Product year. the Let XX% segment. the me quarter, $X to rose up second the $X.X from XX% quarter was million $X.X the second with totaled a million $X.X in start in last Marine of segment the quarter, ago. Technologies Seamap Revenues in million the million which up for quarter

$X.X quarter Klein $X.X from ago. year a Second million were from revenues million, increased XX%

our mentioned, We Guy for although streamer system, likely orders these materialized. occur not later have or source this anticipated SeaLink yet we year next. As delivered believe either orders controllers first will our

year-over-year the In in million segment, year lease the The equipment decreased million and leasing compared to decline in revenues equipment lower split evenly revenues sales. a was quarter, X.X between ago. the leasing pool lower equipment X.X second quarter XX% to

We both the of market are size and to longer-term goals. our and our the adjust compensation monitor sizing continuing the may build in lease market the leasing land and conditions to suit

Let me segments of profitability discuss the the of now. each

gross is compressed a profit This last the second to compared with ago. amounts Technology’s Second margin quarter our And of was higher represents year’s relatively of XX%, gross a result margin slightly which $X.X production a Products for year segment cost. profit flat quarter. unabsorbed in of Marine XX% this million, year is

half was our leasing million ago. our ongoing saw more in a in business, rationalization expense million to from expense, asset due again equipment In X.X second year strategy. Depreciation our reductions to X.X than we depreciation the quarter

depreciation in was lower a which to quarter, of in in leasing $XX,XXX, revenues at XXX,XXX fiscal quarter So, compared raised the and came the XXXX. loss expense second gross gross of sport lower profit the

the quarter products in and leasing expenses to related restructuring quarter. X.X the for were business to The XXXX, reflects administrative our and our year's impact fiscal costs new operations. and last for start-up million the million second general compared improvement related X.X lessened Our the of ongoing second year-over-year of

Our continue respond MA-X we to up R&D XXX,XXX customers. And during to was military and the programs specific quarter, to second compared $XXX,XXX we’re quarter. for of requirements spending last develop expense and as this to year's commercial our ramping Technology

overall to operating of the an second operating $X.X this for the million, XXXX. quarter loss million year quarter loss was fiscal compared in $X.X Our second of

the adjusted capital and debt liquidity quarter cash And about remains loss, structure second of compared and financial $XX EBITDA a very the X.X the equivalents end about and Mitcham's working in entirely included million-dollar of strong. free. loss million of Our was last that second capital quarter, position million Mitcham's we cash quarter. year's million. had remain At X.X to

few just near-term Let some our me outlook. make about market comments

robust project level Scott being our later, As opportunities touched Technologies has customer the such until levels on, decisions technology despite of newer as segment And healthy and interest. available. Products of delayed MA-X SeaLink garnering several Marine are a

military our stronger anticipated orders products April new XX, of backlog this this XX approximately programs firm Technology. year. million XXXX, for and technology. both of result July had as MA-X this Orders a new exposure was been for of to our $XX bookings from include As orders These of this as encompassing up for gained that’s technology segment commercial than we’ve and million of have $XX we

but the of to believe CapEx the previously, sound quarter-to-quarter despite of and activity quite to pipeline difficult year and budgets As some an market apply we backlog the with it’s tightening health approved from remains in that results, a overall bidding marine the prospects ago. short-term of tends indicator we’ve but and demand when overall challenges appropriate general comparing conditions, be said market

backlog SeaLink our the this production facility SeaLink its been strong business, For solid more of should through contributions have rest the year. make order utilized the to than our enough as balance bookings due for keep to year, of Malaysian

are far RGPS are through plan of exceeding year. ahead also tracking the thus systems and BuoyLink Our expectations

As have we for mentioned orders source expectations. earlier, lagged controllers

we of continue are pursue land orders. opportunities specific We that a to these will and number optimistic

large times revenue originally delivery from the XXXX. will products of However, sales given these likely than less systems, these fiscal in be expected from

products. will MA-X recent related its deliveries including order to continue for bookings, fulfilling Klein related

in that relationships We are certain markets. well giving terms new programs with to also meaningful foothold as a government ongoing actively establishing these of as impact government could entities, a both have pursuing

of benefit multiple support years. ongoing types backlog Programs of and these a providing have that encompass of can the activities added orders

leasing relatively opportunity. equipment seen we some pockets but conditions the of have weak, For business, remain

We and Colombia improvement Alaska, Eastern see from expected are marginal as projects to the Europe, the commence expect in second third in quarter quarters. to levels fourth and

we For continue year, expect the XXXX. current fiscal fiscal over improvement to solid

that operating unlikely expect the expected it now However, all positive income XXXX, positive of produce that the we this do fourth delay fiscal quarter we is due by to income of operating to will Guy orders generate but mentioned, year. in for

questions. Guy to feel me we things you let take before turn over that, more with And to comments give back

Guy Malden

Rob. Thanks,

prospects disappointing. source our results in and year our our this way in This shortfall dampens no expected of is the Although sales regarding on business. for effect course the the financial controller enthusiasm

our We the of efforts SeaLink oceanographic, MA-X push and hydrographic, such and to benefits as have continued marine Marine security our industries. Technology defense, the to seismic Products

position applications, our MA-X as will industry into and us customers to the prospects our presence continue to in we marketplace. which and our in leverage both in the enabled particular expand benefit has new new meaningfully near long-term

of enter objectives our provide to to expand new order to as our complete offerings well markets. in One more to as is solutions technology customers, our

visible is development are that number most of we In internal regard, example that. engaged MA-X a of in activities and the

others. more and with our belief such products, more with technology However, in of could we our market other and exploring quickly. importantly technology are economically arrangements cases, portfolio that working It’s much we by to add and partnership perhaps also to some bring products companies, more

in regarding currently discussions engaged number types We arrangements. are of a of these

now. Now, take formal be to questions happy remarks. We’ll that our concludes any

Operator

Thank you. Instructions] Thank [Operator you.

proceed Kansas comes question Bauer Tyson first from question. with line Capital. the your City of Please with Our

Tyson Bauer

gentlemen. morning, With

Guy Malden

Hi, Tyson.

Tyson Bauer

Just up there Mitcham to potentially made to where of favorable you to capital of financial kind the that just to is aspect in a that be required that last some on those partnerships, you partnerships comment participate or partnership? put would either touch on

Rob Capps

to at would able mean going investment They to have do over if obviously to you’re the think required. what Tyson you're benefit will be technology They us we're going so I a take you're the adding and some technologies, to some hope well. But you may cases, all market. as is, investment new the that forms as is, provide discussing. yourself, way have there to financial at, make to looking it look potential to we’re In the long-term I would answer yes.

just think of of answer more much economically we again investment, we that So, variety and looking is, making is Short your are deals that market. forms and question these potential faster to this at. are there maybe way is another to

Tyson Bauer

say established present distribution they partnerships markets have than to potential in? Would safe that then would these that and it yourself to the be larger companies relationships include in are

Rob Capps

think I to fair that’s say, yes.

Tyson Bauer

happen if source be contributing to the are on the that target, QX not as meet we to guidance some of are to your big reliance and controllers needs a are of going hit new to lot of Klein, earlier might you in backfill to as getting thought To they technology Okay. we pushed right a the year, be then putting allow MA-X, what sales to and other areas goal? with these that factor

Rob Capps

particular a of the this impact technology magnitude the an know large isn’t that you from that year, standpoint, Actually, large. it is in surely is impact, but not new of there MA-X

activity as the the contribution be orders there well and some today SeaLink activity, the the executing We BuoyLink our cover source controller we there. that So, think no from are as will answer benefit quarter. do is we on in see coming

Tyson Bauer

With hitting builds? occurring, clients thought, less originally to the upgrades just just you mapping due or less controllers by new that not less is source what

Guy Malden

people requirements It’s the have, Again, equipment is as well as upgrades. less the builds, capital technology not the patterns that for being it and far of surveys. pushed new impending to with shooting as they staying the constrained being new right all

– some all boat is resources we shooting of some So, only new one particularly any thing are kind it additional not the trying any builds out, upgrade aren’t The for coming or on builds. is the there. There really add but side new to above.

Rob Capps

delay just it's people can. what they CapEx I trying Tyson, as to we're mean are seeing, think as Yes. long we

last in liked the minute. of kind So,

Tyson Bauer

last get I’ll one And Okay. from back in me, queue.

especially provide that of these you the the contracts government, think the Are just to this And individually these of I for you by and that have any something and a of multi-year, pipeline your these watch? Mitcham, I’m think lot outlook, military which commercial you really with guessing size to scientific commentary your said small these do kind contracts. size? and type contracts? a we moves you your alluded could Are timetable applications. I on needle given or can focus

Rob Capps

yes, think all mean, is, right think an from our they But size in a they sudden, are really for markets, build day. I not the I have beyond as and do do enough importantly we and a of as needle to that us. Sure. that. next we're sales They such have establishes move allows size impact, it to certain that us the

So like number not pursuing that the of a the to are of adds by would to these before. their are end couple year, importance. of now, There a We relatively something if near-term. them see we’re

I So, keep your balance know, year. of the think, open through eye you the

Tyson Bauer

thank Alright, you.

Operator

Investment line question questions. next Partners. the of ARS Your Please proceed your comes Taylor with from Ross with

Ross Taylor

company company to is being defense, flow from on and Thank free with you. XXXX of particularly We'll a bigger should sustained see growth hopeful year number shareholders the asked being government and regard the where capable to of topline Tyson my basis, picture cash producing generation? questions, crossover but the finally

Rob Capps

Yes. do again year, hit this talked Obviously, we reasons we Ross, think today, bit the but I bit about have that. earlier, already been really delayed. into went we think for we a things

enthusiastic we we’re ended benefits are show this taking are thing firmly every financial and fourth believe start quarter year, as bit as and We as really it. ever to we the where believe do into to that the as of we so, next going to as

about we’re that. very optimistic So,

Ross Taylor

you talked therefore we're in you limit further? push there any they think them and pushing upgrades to And to would to to getting be XXXX, really customers can that decisions push that the how to and they do where get and we the far right to the going buys but right are can right, about a

Rob Capps

Yes, that I delayed mean think, risk obviously something every it away. but I a is time is there goes always

can’t need seen and and think market We lot think we happen that yet, a that conditions that, year. don't orders happen, year. We it’s of to haven't can going again the push things these out just are to but just gives late such happen year, so that on. deliveries we're are we change this There especially into but away. execute a ancillary will later that emphasize in This received see danger we always are going later that were this next – times, for we to be do delivery products, going year; that’s

Ross Taylor

important longtime able strategic that think that our it’s of held at two if have the and that. this because guys no the simply shading industries, be until love company followed, of are We patient easily about us XK find X old couple of companies you our weeks under valuable, shown patience strongly incredibly is market investors matter you even the year two we would out you not have across I been think clear a and a this the quite kind us you company tertiary least two turnaround to a Okay. would, service patient your last process exciting redirect that I would I are. and wide weeks take shareholders this it’s quite opportunities an worth more technology Rubicon. hope had the sorry it the it’s remember it’s on not misery, whether for cross say from honestly, of kind provider the that that belief at oil see really have have is stories Tyson, that strongly very when think the – or is your XXXX issue would last you're trading out, is strategic and small the to shareholder times for up three array endless waiting how investors of get good times but to And and not being as under-followed X and that company but company of you to a technology-focused that who to valuable, doesn't put

Rob Capps

Understood. comment. the Thanks. Appreciate

Ross Taylor

you, Thank sir.

Rob Capps

You bet.

Operator

[Operator Instructions] you. Thank

City your Capital. Tyson with with Bauer Our question. follow-up proceed from next is a Kansas question Please

Tyson Bauer

director you on for having US greater doors to military admiral, added does of countries You a recently the business, and open on with that your obviously, replaced or with NATO-type government presence? retired military a focus by that or side the

Guy Malden

was I guess we hurt, move council as we the of as think – the on into only not but wanted some idea is to I how can't markets, these business it bringing the new Willy to conducted. technology,

So, be I think us he can will – to in helpful directing that regard. as

just think works, Just will it on we're but orders. not getting mean the That’s for having start us. to him the I board a it be different benefit way doesn't going

look really I the it what just on-board. really us. for We’re excited for We at kind his him lot perfect right to a we brings of need have now. think he background, is table really to

Tyson Bauer

your are well don't the prospects your lying forecasting need you – use And you you ATM at now preferred? to closed use any in point Or need front are of on a with for that that? pretty we off, that’s

Rob Capps

not ATM it’s it kind wouldn't, this left I dollars not wouldn't of frankly. we preclude point. there’s that but much big I wouldn't up, finish necessarily on at

Tyson Bauer

on some secondary certain a primary with were after, bidder going still say, Or And a as primarily, you that into well-publicized you where I deals getting Okay. service to a a are be Elbit? you’re for a of you you can think sub we’re position contracts that’s subcontractor where or are others? seeing, these

Guy Malden

both. It’s

these on prime at least the of the are are projects of both we're We one cases. pursuing, but

Tyson Bauer

first And for is a that you?

Guy Malden

No.

few but first. in not years, First

Tyson Bauer

That sounds you. Alright, thank good.

Operator

Thank you.

management the question-and-answer We floor now turn have I over session. like back of reached to comments. for the the would to end closing

Guy Malden

us to for Thanks look of third and you forward our end the at very thank to joining like today, would talking again to I quarter. much. everyone

Operator

for your today's participation. This you teleconference. thank gentlemen, Ladies and conclude does

and lines, wonderful a your day. disconnect may have You

MIND Technology (MIND) 5 Sep 192020 Q2 Earnings call transcript