Please standby, your program is about to begin. Welcome to the Geospace Technologies Second Quarter 2016 Earnings Conference Call. Hosting this call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Tom McEntire, the company's Vice President and Chief Financial Officer. Today's call is being recorded and will be available on the Geospace Technologies’ Investor Relations website following the call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to Rick Wheeler. Sir, you may begin.

Thanks. Good morning, everyone and welcome to Geospace Technologies conference call for the second quarter of fiscal year 2016 and thanks for listening today. I am Rick Wheeler, the company's President and Chief Executive Officer and I'm here with Tom McEntire, the company's Vice President and Chief Financial Officer. I will start the prepared portion of the call with an overview of the quarter and Tom will follow that with an in-depth review and commentary of our financial performance. I'll then close out the prepared portion of the call with some final remarks and we will open the line for questions. As a matter of convenience, we will make the replay of the conference call available in the Investor Relations section of our website at www.geospace.com. First, let me caution that the information we will discuss this morning is time-sensitive and therefore, may not be accurate on the date one listens to the replay. Secondly, many of the statements that we will make today will constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. By example, this includes statements about the market for our products, revenue recognition, planned operations and capital expenditures. These statements are based on our current perceptions, expectations and knowledge. Actual outcomes are influenced by uncertainties and other factors that we are unable to control or predict. These risks and others, both known and unknown, can lead to undesirable results or cause our performance to materially differ from what we may express or imply. These risks and uncertainties include those discussed in our SEC Form 10-K and Form 10-Q filings. Yesterday, after the market closed, the company released its financial results for the second quarter of fiscal year 2016, which ended March 31, 2016. As we mentioned, the second quarter was very…

Thanks, Rick, and good morning everyone. Before beginning, we remind everyone that while our discussions today may include estimates of future cash flows and other events, we will not provide any specific revenue or earnings guidance during the call. In yesterday’s press release for our second quarter ended March 31, 2016, we reported revenue of $14.9 million compared to $28 million last year. Our net loss for the quarter was $11 million, or a loss of $0.84 per share compared to last year's net loss of $5 million, or a loss of $0.40 per share. For the six months ended March 31, 2016, we reported revenue of $28.1 million compared to revenue of $49 million last year. Our net loss for the six month period was $22 million, or a loss of a $1.69 per share, compared to last year's net loss of $11 million, or a loss of $0.82 per share. On operating results for the quarter and six month period include tax charges of $500,000 and $2.5 million, respectively, for the provision of a valuation allowance against our Canadian subsidiary’s deferred tax assets and a net adjustment of $1.2 million and $1 million respectively for corrections made to our fiscal year 2015 income tax provision. A breakdown of revenue for each of our product segments is as follows. For the second quarter, revenue from our traditional seismic products was $3.2 million, a decrease of 67% compared to revenue of $10 million last year. Revenue for the six months was $8.2 million, a decrease of 53% compared to $70 million last year. The decrease for both periods reflects lower demand for land and marine exploration products due to a continuing decline in seismic exploration program activities. Our wireless seismic product revenue for the second quarter was $4.7 million, a…

Thanks, Tom. Reflecting over the first six months of fiscal year 2016, now behind us, seismic exploration activity and resulting demand for our products has dropped to unprecedented and enduring low industry levels. Moreover, because most oil and gas companies are focusing their limited capital spending on production related project commitments, we maintain our belief that seismic exploration will remain relatively unfunded through 2016 and perhaps longer. In this anticipated environment, demand for our seismic exploration reservoir monitoring products is expected to remain at these record low levels and as such, lower revenues and inevitable operating losses are expected to persist. We want to make note that throughout this period in the absence of ongoing seismic exploration activities, new potential oil and gas resources are not being found and existing reserves depleted through extraction and exhibiting decline are not being replaced. We stand by our view that this condition is innately unsustainable and any long-term rationale for energy stability unequivocally necessitates meaningful seismic exploration to find new reserves in seismic reservoir characterization to optimally recover existing reserves. Our proven leadership in the products and technologies that best performed these tasks along with the strength of our balance sheet place us in a uniquely superior position within the industry for an inevitable recovery. Our balance sheet reflects no long-term debt and over $43 million of cash and short-term investments. In addition, we have an untapped credit line of about $30 million. This total liquidity of over $73 million combined with an approximate $7 million of annualized cash savings, expected from cost reductions implemented in January, underscores our wherewithal to manage and endure the current cycle while continuing develop and advance the technologies that will drive the seismic industry. This includes our prepared remarks. So, I will now turn the call back over to Zack for questions.

[Operator Instructions] Our first question comes from Bill Dezellem with Tieton Capital. Please go ahead.

Thank you. First of all, the tax refund, $18.3 million you said was received in March. Where does that flow through the P&L and cash flow statement?

Bill, it would not flow through the P&L. It would flow through the balance sheet. We had a receivable booked for that. So it flows through the P&L last year, when we booked a tax benefit and we just now received that benefit this year. So, no P&L activity in this fiscal year would have happened last year. In the cash flow statement, it’s going to flow through the income tax receivable line as a positive source. There is a $9.9 million positive cash flow input, offset by an accrual of about $7 million for next year’s tax refund until this current year tax refund will get next year.

Great. Thank you. And then also continuing down number questions here. Inventory obsolescence charge, what was that in the quarter?

Well, for the six month period it’s $4.2 million. I don't recall what it was at the end of the first quarter but I think it was larger in the second quarter than it was in the first.

And that’s the essence of that. Looking forward. Thank you. And then, Rick, what are you seeing in terms of trends and conversations relative to OBX? Are the conversations increasing, decreasing, no real change?

I don’t know if there is any real change. I mean there is projects out there that are being tendered that would utilize the OBX. Some of them are for later dates. Some of them fall into next fiscal year in fact. But the activity has been about the same in the last few months.

And how about for reservoir with continuing lower oil prices, are those conversations trending downwards or they somewhat holding at the levels they had been?

Those conversations are always very sporadic and sparse in between time, flurries of activity. The things to note is there aren’t any active tenders right now out there and so to that extend there is no formalities in those discussions. We still have the discussions with those technical components within the oil company so.

And then finally, we don’t often ask about the non-seismic businesses perhaps curious. The strength that you saw here this quarter, do you consider that the beginning of some sort of a trend or is that just a normal variability in that segment?

Well, there clearly is variability. You’ve seen that before.

Right.

But we do believe that there is some backbone behind the additional interests that’s being developed in these products and to that extent, we are doing what we can to continue that and exploit that.

Thank you, both.

[Operator Instructions] Our next question comes from Ken Sill with Seaport Global. Please go ahead.

Good morning, guys.

Hi, Ken.

Hi, Ken.

Yes. I just wanted to follow-up on the non-seismic. What kind of products, if you could refresh us on what's actually in there, and is there a seasonal component to the revenues there?

The components in the non-seismic are kind of a -- it's really a motley crew as it were. But we’ve got sensors that are used in other non-seismic industries for vibration monitoring, security monitoring and that sort of thing. We also have our thermal products, which in essence are operating devices that are used in the textile industry, in the flexographic industry and other places. We have other industrial product used in the water meter industry for cables and connectors that find use in non-seismic applications. So it kind of hits a lot of basis.

And is there a -- I know that like in the product business in the oil patch, generally there is a fourth quarter spike in revenues and I know a downtick in Q1 on a calendar basis. Do you guys have any sense -- that couldn’t really parse out any different seasonality in the historic data?

There is not really very much seasonality, I wouldn’t say. Do you Tom?

No. No.

Yes. It does have lumps here and there but it doesn’t seem to exhibit much in the way of seasonality.

So, I guess the tough thing is there could be a lot of variation from quarter-to-quarter but you think the underlying trend is still positive, more so than it’s been.

Yes. I think that’s an accurate statement.

Okay. Thank you.

And there is no further questions. I’d like to hand the call over to Mr. Rick Wheeler for any additional or closing remarks.

All right. Well, thank you, Zack. We would like to thank everyone for joining our call today and we look forward to speaking with you during our fiscal year 2016 third quarter conference call sometime in August. Thanks and goodbye.

Thank you. This does conclude today's conference call. Please disconnect your lines at this time and have a wonderful day.