MIND - Earnings call transcript Q3 2020

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Operator

Greetings. Welcome to Mitcham Industries' Fiscal Year Third Quarter 2020 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.

pleasure your my Mr. now is to host, introduce It Ken Dennard.

Ken Dennard

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

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

Before details to housekeeping have the I normal turn the through. call over to management, I run

speaks only XX at of December will days features therefore, are time listen to XXXX, a of be to Information accurate Thursday, was to you available to it or Investor instant as the and for via in on webcast replay If X, the section of you'd reading. replay like access be that of XX. no release. recorded longer the provided via today's any replay until may call going listening time-sensitive mitchamindustries.com Information by as of information call, advised earnings December a today, these how this replay yesterday's reported on Relations transcript Company's or website

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

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

that like behind Guy the turn Malden. to me, with now Guy? And to call I'd over

Guy Malden

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

me begin let by quarter. comments Now brief few the making about a

The well. was and market third slightly our just recent sequentially but earnings revenues, as better expectations, in a improvement and not EBITDA net quarter operating than adjusted income, in

contributions were up Equipment basis, strong the with sequential On from revenues from a QX business. Leasing Seamap as XX% coming and Klein, levels as well

seismic South are conditions areas uptick Europe. we leasing America are more there within markets and some certain seeing favorable such available While are in challenging, opportunities as and still an

drove most segment the Order and closely solid has results, of flow Products with expectations. tracked been the at mostly Marine sequential quarter Looking upside more our Technology third gains. has

sonar and we proprietary systems. last RGPS deliveries well our releases announcing you'll XDX products technology BuoyLink news based orders As of our on several recall, month, as MA-X had as

awareness and the both gaining benefit security further and and the will industries. are defense, seismic orders in the quarter XXXX, current we fourth maritime oceanographic, increasing These traction and hydrographic, confirm fiscal

the of and customers capital expansion new there there are availability to the While new both in seismic at through applications be technology, continues customers' for overhanging issue our opportunities industry. of least

below controller global source capital due economic uncertainty. come and have Seamap our orders both in QX, overall restricted in projections to mentioned we As more

materialize. industry headwinds, orders Though been potential will due to eventually have believe orders delayed these we these

Technology near-term the the we us marine many with our despite opportunities available market excited Marine overall very to pleased challenges, through about of health and the Products. are are the Now

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

Robert Capps

you, current a our review near-term detailed usual then Guy. some the views financial make comments results, I'll about making by more on I'll and of Thank – begin giving as the market.

start Marine me quarter up the for Products $X.X Technologies segment. $X.X the quarter totaled million Let Revenues XX% with second year-ago, million in from million $X.X quarter down in this but the the in the of from the third segment XX% year. a

$X.X in in XX%, million up third $X.X the to XXXX year-over-year rose the sequentially. or and quarter million revenues Seamap quarter

XX% included Dutch a quarter Navy, source Third Of well million were delivery recall. Klein system system as period but controller the both decrease up sequentially. $X.X sonar the from the may as of you as year-ago, the revenues from for year-ago a the $X.X million, at

In Leasing in segment, to a the quarter to third $X.X revenues compared in the Equipment million million $X.X year-ago. decreased quarter the

higher basis, by to the XX% Although, sales, up On segment seismic was in mostly was revenues. the year-over-year driven decline lower equipment due decline revenues. leasing was leasing there a sequential a also

me let of of Now profitability the discuss the each segments.

$X.X down gross higher Technologies compared this which profit year-ago, prior quarter. with of of This products to introduction a the represents at year. a Marine compressed our from quarter slightly profit decline was million, is and Third product in in year's Seamap. along mix a but to in last segment margin in from third The QX XX% gross XX% changes million $X.X was quarter cost related at new up margin XX% some of result for Products $X.X million the

was to year-over-year year-ago third In $X.X was million expense posted sequentially. flat from nearly our a in reductions we strategy. ongoing million depreciation again to Equipment and in our due our Leasing $X.X the rationalization asset half expense business, quarter Depreciation

was Gross period $XXX,XXX segment and this $XXX,XXX comparable versus in second the profit year-ago for quarter in third this in the quarter $XX,XXX the year.

were year's due this SAP $X sale strategic to and of quarter $X.X quarter last Year-over-year administrative Our Russian for and restructuring of quarter. XXXX improvement compared activities lower as our cost reflects subsidiaries. fiscal year’s well general and to million both million the third expenses the million for third $X.X for second as

development on year. new risen this have focus as $XXX,XXX These and spent was third this to continue $XXX,XXX and have our quarter, research compared year's requirements quarter Our development. last $XXX,XXX expenditures as as initiatives last quarter customers. to expense during commercial technology and well response develop we from product other our higher, expenses to military tracked MA-X our in R&D due to

others also offerings. initiatives are pursuing We technology and a number to with partner product of expand to our

compared for quarter to Our quarter but in year the in the the overall third operating from loss operating sequentially million of quarter, was the $XXX,XXX prior million $X.X loss this $X.X loss as year-ago posted this improved year.

million quarter, quarter, third a loss was last $X.X this EBITDA a year's third year. this profit Our on compared quarter to adjusted profit and $XXX,XXX QX $XXX,XXX during

our quarter, the had structure of about that million. free I'd capital remains million the the included a taken At sheet order about accounts and cash cash $XX.X – in debt of of month was Mitcham's reflects like balance working also liquidity driven the end million to as $X.X place by in increase remains capital note quarter that deliveries good. $X.X October. equivalents and during about we receivable of that of

on land areas, with to uptick the redeploy that activity some into model expanded also agreement new in technology. some INOVA Lease in It's leasing noting Equipment took opportunity We our we land recent the pool and with it’s capital worth a selling was Europe. capital new in immediately equipment. $X on deployed lease of million project currently equipment multi-month the reinvestment we up This freed recent about and lease in periods by

make let me our about outlook. a Now just comments near-term few

in largely to Although source been performing whole a orders the and expectations, it's Product continue controller well our Technologies recent Marine our track line is below forecast. as segment with

than third decreased a time. Our than double firm think demand. million, quarter $XX.X project of the decline this backlog from still broader a but timing the We quarter the from end in backlog slight the the ago million at it’s second the backlog of indicative year from is last order more decline million quarter of of $X.X overall $XX at more rather

are commercial in unavailable well SeaLink still enabled ourselves seeing and differentiate a levels into particular us. for solid MA-X We for a marketplace had inquiries been and and markets in that new as technology source BuoyLink, to controllers. pursuing as us are military to of our number customer previously interest the and such foothold healthy has technologies as MA-X gain of

traction next-generation strategy our on Our the of and growing vehicle recently technology. We our progression install firmly a expansion be MA-X products we expanding unique as technological announced milestone represents and getting in of these important that our further believe underwater an awareness. a leverage will contract greater recognition to benefits markets to our of the able expertise

SeaLink to deliveries anticipated our towed current quarter should streamer a make due fourth the in business, Seamap contribution products. solid of For

we orders. the and controllers, pursue will to remain these order opportunities that land source flow continue Regarding for we in market the reduced optimistic

fiscal for necessary components place given lengthy that the certain likely in systems, third-party lead will sometime take for times larger However, these XXXX.

technology. fulfill to bookings, for deliveries including recent MA-X products Klein its utilizing sonar order continuing is this

pursue continuing that We span programs to are can certain opportunities sizable multiple also years. that can governmental yield

For Equipment Leasing although the In Europe. are improvement certain there sequential America, South activities see relatively slowly in conditions an recovering, is there to overall opportunities quarter. fourth remain seem markets. business, the Therefore, and marginal in weak, market activity to in increase in we be expect

year, income strong exit fiscal in fully and setting fiscal that a over and For year operating anticipate EBITDA continue solid the generating adjusted we for will expect XXXX positive fiscal to current XXXX. we the QX, improvement trajectory

we before back your over for Guy take things turn me let questions. that, closing comments to few With

Guy Malden

Rob. Thanks,

The tight, we largely our are are excited we about our And in market third although with we build to space headed. quarter technology marine on remain on performed expected. customer some budgets plans the as where and track segments in are strategic momentum

will coming and plans expand current to Our strengthen our base add on efforts enable ongoing us access to product markets execute years. portfolio existing growth for our the to more and industry markets products the competitive our and and growth the in new our in for opportunities in position technology

products Technology through only these to the not Mitcham, by in actions, market we've newer such the driven proactive These technologies to orders a that to the previously been testament steps to unavailable address year SeaLink. to the appropriate As as and us were orders MA-X taken business. our and invest the recast as attract you needs were obtained look company and transform need we have new as at Marine provider,

The continued existing and of and going marine expedite government the Marine helping our be of line. the development technology, pursuit the to alliances forward to expansion multi-year new enhancements programs product other and business of our creation product segment markets improvement in focus our worldwide. into parties via leverage will Our further of products Technology markets

That happy questions formal remarks. now. concludes to any take We'll our be

Operator

Instructions] Please Tyson Bauer Capital. [Operator you. Our first proceed. is with KC Thank question from

Tyson Bauer

Good morning, gentlemen.

Guy Malden

Tyson. morning, Good

Robert Capps

Good morning, Tyson.

Tyson Bauer

seasonality the your little quarter. and in maintain income the your into suggest we a can side operating orders, for looking in $XX for positive maintain maybe than EBITDA, million fiscal positive XXXX, the on quote just given those can the about levels clarification we seems going on believe you release of in Rob, in much larger next fourth comment, press make We the leasing to it that is book like to pipeline firm you this year. expounded that

Just give us…

Robert Capps

Yes.

– question. in fair I it's yes, not understand it out. business, say we're leasing think that I to to your but And some the be. is itself seasonality used it's There seeing even what

of inquiry the as leasing and strong flow out we're swings as the across order the importantly, dramatic I more the But seen So the products we've quite flow aren't in side that group. think is past. technology the seeing

last – was this if it what time backlog you the is year. double So

year. So it was last million like time $X this at

year. things of us and got didn't we really about SeaLinks on SeaLink. you gives see right to good think two and shipped we not now contributing time we've much that any that basically a it, And That's that products year. this shipping confidence have we're So if last starting front. that last as MA-X stronger had We time this continue newbuild

So are big those things a that's having – impact. both

combined confidence. things give So all those us the

Tyson Bauer

how into operating you profitability. income backing to just get And Okay.

million. unusual lease revenue in leasing compared product what sales, if line $X.X you in activity looking bump fairly any increase tech what, year, a Excluding the we're side, a last did, to at in marine the dramatic pool you're marginal only at looking

You're that, of your also that products, was lot of book that get which forward a the lot of there seeing large what to board some And the implies inquiries? million or the around firm level. correlates with to pegged $XX just looking are closer third to targets? of quarter. that kind the is maintain to going that have you have marketplace? that you out that It in Is contracts what many you're Or a can you the backfill across

Robert Capps

across so are out or prospects I'd are really which key it's significant I to additive kind look quickly. that but be to all backlog There say to that the certainly some quarter, board. And maintained the indicates can't it's thinking the that now, there, of about particular where make it's it right opportunities more more I backfilling happen, past point are any board. think across we of across really board. what we've if we're one at kind you two would the it pretty

Tyson Bauer

you're as where Or doing you getting there. normalized product additional expect where for What do we should margins, looking new you a got are to? get to level? you Klein introductions, – back to that costs

Robert Capps

Well, back I have XXs headed mean think you for that say to I we margins. [indiscernible] big I ago, incremental if were some higher that's to impact think a cost. fixed start where had going we where gross the year it's a

Tyson Bauer

an flows, needing your on the getting company of going inflection quarter? financials, you the it those in the is financials kind and Your this also sustainability expected eggs into Are lot that your enthusiasm with on value not reciprocated regards stock and in forward? of this the things your Is on value belief putting growth, one company. the this a point point of point for inflection to not reached inflection capital, cash we

Robert Capps

I wouldn't that. overstate

good longer feel feel the we we but as really things about well. think quarter, about I good term

if So our that enthusiasm think to it'd unexpected, be don't disappointing, happen but were dampens whatsoever. yes, I something

pretty things We feel now. fund some things partnering of There's have that expanded at cocky the of pretty a haven't We've we're right lot for that really talked we obvious right looking about reasons. now. We opportunities some yet our in works. exciting

Tyson Bauer

the bid There's in with contracts Dynamics, put units Navy those the press end whether that fast-tracked on Overlord U.S. the the innovation being of of common for are a Textron, without and to kind for for vehicles it's Navy. unmanned vessels that lot U.S. vessels unmanned getting the Marines, guys up large within General lower through at

you've Navy. that releases up technology two MA-X go press for you segment bid? why the Are for changer us those on be expensed a fast-track in you. more part game we U.S. can is last keep that why color in related a the or of close that with to Give what And that don't that contracts two can and eye little the a you on should weeks and

Robert Capps

But both is growing I say lot mean, I The competitive and can't you're vehicle for right. reasons, obviously, security a unmanned about programs specific market reasons. rapidly. obvious very

that see opportunity for areas. certainly we several a So us big as in

MA-X just suffice it say guess I talk lots specifics, think while vehicle unique. particular, of because we opens that unmanned can't I programs. to And some is So in doors about the us it are involved in technology, I for

Guy Malden

me focused of past one on particularly let this vehicle R&D more a underwater lot Tyson, is Tyson, year, And expense comment. the with MA-X, applications. add

tow vehicle. got also fish a we've a tow So a expression, body, but

So to we pay have starting significantly in invested space and off. pretty that we're see things

Tyson Bauer

fulfilled across looking seen contracts whether potentially? Is $XX you're situations they're and at that Okay. not, the opportunity multiyear-type or the seen contracts, we've announced, pond, million be that wait $XX of see. kind million, And similar we've we'll

Robert Capps

too programs everyone in I multiyear. specific, these can but an period like. They extended be in, And be hesitate once can time. what for of knows you're look you're to

certainly it's impact. going to have big So a

Tyson Bauer

right. Thank gentlemen. All you,

Guy Malden

bet. You

Robert Capps

Thanks, Tyson.

Operator

next question Ross with Our Partners. from Investment is proceed. Please ARS Taylor

Ross Taylor

was that two Gentlemen, Bauer's where Thank prime. the working primes, And both your I little understanding your, potential of like which case? Navy had that they vehicle to reduced it were questions. required Mr. they use thought believe, somewhere read Is the MA-X I a and one that It's bit I to that had I'd was on to technology. my comments up you. a pick down-selected on

Robert Capps

program. comment Ross, can't on we about specifics that really

said issues what are, kind some of Again, that. you about there we've about issues can well we much that. security saying as competitive think too from as us tell that again, keep more I really

Ross Taylor

Okay. technology? is MA-X How unique your

Guy Malden

a this nobody we particularly unique. side-scan made product and else it the extremely It Again, from We've It's game sonar. industry's capability, has from patented with is has when and technology perspective. changing the traditional perspective that it. certainly our

Ross Taylor

Yes.

vehicle the what's the area. kind actually is about rate, – about military and – like looks of at to on like also probably selling cycle XX% talk market potentially in commercial the least read but needed looks how it passes there's big towed, market system, really market, seem I about talk of reticent math both the how looks what significant cover to can to you is, the mean, here, a it from U.S. like? huge number and it military autonomous us It things saves and an do and the I've So like markets, us pass the to commercial scientific obviously, to you about

Robert Capps

exactly That's right. Yes.

Ross Taylor

Okay.

as easy. All so was look that launch GPS – a store. worked things relatively not the we to at had effectively honestly, built, grocery contractor some defense had weather you missile and actually mean, built missile result, find launch particularly targeting, air cruise And before and develop existed the quite allowing you your a is when deep to cruise these allow I for of system, I do air which to was not nearest was

But opportunity map How an pretty opportunities use that big wants that forward. for, there strike something And needs ability pass market? there much particularly vehicle. so be on significant is this huge advantage it should no that to it would is a rate as without Navy vehicle, to it sea – be anywhere decides as and autonomous market a substantial the lower underwater to me much the going mapping, a such having mapping are under do

Robert Capps

multiyear call. you – in market, in that thing of side. hundreds market not It's maybe be address haven't that of talked is that aspects very commercial We that should of not more, But on the it's mean we all large, you see multiyear and huge this potentially. survey programs market well, Commercial mentioned a if huge, The about military dollars, I a millions not for purposes… the yet. different it lot

Guy Malden

Wind that's farm [indiscernible] what we've hydrographic pipeline lot recovery, specialties. it's There's commercial frankly, search been asymmetry, quite by of whether development, curio lot a There's applications, shipping survey. and of a to… containers

Ross Taylor

Indonesian things airliners, like that?

Robert Capps

That's exactly. exactly Yes, right.

Ross Taylor

is changing. the they're and use I if the So like ability really your instead powerful is mean, things of game math system what that so to that using

Robert Capps

Yes. We think We so. so. think

Obviously, cases. You sales though, else, in to displace cycle. the about you asked something have many

bit a it So that but… makes longer,

Guy Malden

one thing we I on future. perspective for will want touch a we talking about the start – to that from haven't that technology

– With a in expression a on, concerning MA-X to at additional other the we vehicle, the angle MA-X that of that even develop – look supplements additional as gap coming particularly on this vehicle, fish to family us that that year, going on can enhances tow it put technology. or technology. again, talk we some allows We're technology about the and this some

at And MA-X, additional before, again, stated us this we has look whereas we've as the didn't to capability to do technology, allowed have MA-X that. without

working again, in going be things So we're to that around exciting our about on talking the we're MA-X based some future. additional technology

Ross Taylor

talked about the guys talking see Mitcham hear to not I things $XX as because with put, is enough glad million, been simply investment biggest have you I'm say mean And million problems cap. one market think me at I you that the you to talking I – $XX it, what about I opportunities. about of that an think

it's in head quarter just take The valuation head seems. it away its equally the one this going marketplace in it action a me. I ramp. me people of price to really in because us – is perhaps to rollout people pushback to to company that's recent as scratching on focusing profitability, the scratching mean the someone is day, One front or starts

would And over them, are be when to themselves, I information to one as not, offer and focus Bob, we we company you reality, $X for really a them you saw to selling we someone's a if day. this to because and I unfortunate believe think – going need enough seem share investors them and in Conference, Sidoti were about really $X are on to value you that's at giving guys stock. the this would investors going believe the fairly to talking day, walk fall in us as opportunities to going if

Robert Capps

Got you.

Okay.

Ross Taylor

Okay. what good to cycle. the up the can speed Otherwise, and Keep do thank you work up you. sales

Robert Capps

You got it, Ross.

Guy Malden

you. Thank

Ross Taylor

care. Take Okay.

Operator

remarks. I have would back over for the our We conference session. like end to reached to the of question-and-answer turn management closing

Robert Capps

look you we joining to and like I'd and year-end to after next to fourth talking everyone our for full quarter results much. Thanks year. today, us you thank fiscal forward very

Operator

does This participation. conclude your for you conference. today's Thank

wonderful disconnect may lines a your have You and day.

MIND Technology (MIND) 5 Dec 192020 Q3 Earnings call transcript