Welcome to the Geospace Technologies Fourth Quarter 2016 Earnings Conference Call. Hosting the 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.

Good morning, and welcome to Geospace Technologies conference call for the fourth 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 call with a prepared overview of the quarter and the year 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. For convenience as mentioned, we will place a replay of this conference call in the Investor Relations section of our website at www.geospace.com. Let me caution that the information we will discuss this morning is time-sensitive and may not be accurate on the date one listens to the replay. Also, many of the statements that we 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. Such statements are based on our current knowledge and perceptions while 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 filing and Form 10-Q filings. Yesterday, after the market closed, the Company released its financial results for the fourth quarter of fiscal year 2016, which ended September 30, 2016. As we reported, revenue in the fourth quarter was $16.3 million, a decline of…

Thanks, Rick and good morning everyone. Before beginning I’d like to remind everyone that we will not be providing any specific revenue or earnings guidance during the call. In yesterday's press release for the fourth quarter ended September 30, 2016, we reported revenue of $16 million which is essentially flat compared to last year or net loss for the quarter was $12.3 million or a loss of $0.94 per diluted share compared to last year's net loss of $13.5 million or a $1.03 per diluted share. For fiscal year 2016, we’ve reported revenue of $62 million compared to $85 million last year. Our net loss for fiscal year 2016 was $46 million or a loss of $3.52 per diluted share compared to last year’s net loss of $33 million or a loss of $2.51 per diluted share. A breakdown of our seismic product revenue was as follows. Traditional product revenue for the fourth quarter was $2.6 million, a decrease of 60% compared to revenue of $6.5 million last year. Revenue for fiscal year 2016 was $13 million a decrease of 56% compared to last year’s revenue of $30 million. The decrease for both periods reflects lower demand for our land sensor [ph] and the rain products due to lower seismic crew activities. Our GSX and OPX wireless product revenue for the quarter was $5.2 million an increase of 310% compared to revenue of $1.3 million last year. Wireless product revenue for fiscal year was $18.4 million a decrease of 27% to last year’s revenue of $25 million, which includes $3 million of revenue resulting from a purchase order cancellation. These mixed results for fiscal year 2016 reflect the combination of two factor, first, reduce seismic exploration projects and an abundance of unutilized customer owned equipment have resulted in very weak…

Thanks, Tom. In conclusion fiscal year 2016 saw demand for our seismic products fall to unprecedented lows. Throughout the year oil and gas companies continually revised capital budgets further downward and in many cases seismic exploration activities seem to have been disproportionately impacted by these cuts. As direct evidence of this, the count of active seismic marine vessels and land crews alike has dramatically diminished from that of prior years. From all indications, fiscal year 2017 is likely to see a continuation of these circumstances. While underlying statistic change from one month to the next most energy watchers and independent analysts do not believe a balance in crude oil supply and demand will be achieved in the near term. Such a condition will further perpetuate low oil and gas commodity prices and volatility and seismic exploration investment by oil and gas companies will likely remain minimal during that time. Meanwhile producing fields will continue to decline and depleted reserves will go without being replaced. In the longer term perspective this is not sustainable and a resumption of seismic exploration and reservoir monitoring will be necessary to address the deficits that result from this paralysis. Our products are design to bring real innovation and value to our customers and the seismic industry as a whole, and we believe we are well positioned to continue in this tradition when the industry recovers. Our strong balance sheet reflects the $37.8 million of cash and short term investments and along with $29.6 million available under our line of credit; our total liquidity tops $67 million. By prudently managing our costs and focusing on our customer success and the products they need and deserve, we are preparing for an industry recovery that will inevitably occur. Now this concludes our prepared remarks. And I'll now turn the call back over to Leo for questions.

The floor is now open for questions. [Operator Instructions] We'll take our first question from Mark Brown of Seaport. Your line is open.

Hey, guys.

Hi, Mark.

Just wanted to ask about the commentary around PRM orders, that you're not expecting any contracts to materialize for next year, it’s still long ways away before we get to the end of next year, I'm just curious why you felt that outlook was really that bad that you not even building any expectation into your guidance?

That's a very fair question, Mark. The reason is because generally those negotiations on tenders and the establishment of the technical aspects associated with those projects entail takes a length of time that would typical precluded from happening in fiscal year 2017, even though some discussions might be going on now, it just historic view of how long those negotiations and design projects take.

That makes sense. I guess just generally it seem that your outlook for all the segments of your seismic product lines were pretty cautious I guess I would say. But what would you have to see in terms of oil prices or whatnot, and I know part of the problem is many of your customers are focused on protecting their own balance sheets and paying out dividend and that sort of thing even it would make logical sense for them to invest in some of the PRM or the OBX products. And I just curious what's the roadmap for what would stimulate new orders to materialize again?

Well, certainly an increase in oil price would stimulate more spending within the oil and gas companies, where in the seismic exploration activities would pick up, that's really the base issue. Regardless of where prices go and where they stay eventually the reserves that are being depleted and produce now are going to have to be replaced. The problem is that supply is now are exceeding what the demand quantities are and so there are just not in the mood to explore. You've got some of the replacement reserves in more than several decades or falling below what they produce. So, oil prices will help, but in the end you're just going to have to replace these reserves one way or the other.

Okay. That makes sense. And I guess one more question just on your non-seismic businesses, which ones you think would grow the fastest and maybe which you have the higher margins and you mentioned the couple of the applications industrial and imagining and water metering [ph] and that sort of things.

Well, we don't really reveal the margins on the various components of the segment, but the water meter section has been exhibiting the fastest growth, that something that a lot of municipalities are moving towards is automatic meter reading and the connectors and cables that we make for that industry are very robust and serve a very good purpose within that market. So that has exhibited lot of growth, but we do anticipate some potential growth not only in that area but in perhaps some of the other components as well.

Okay. Well, thank you very much.

[Operator Instructions] Our next question comes from Matt Dhane of Tieton Capital

Thank you. I wanted to ask about the – what appears to be an acceleration of inventory obsolescence. I was curious, would you expected to continue at these higher levels or even accelerate potential further here going forward?

Good question, Matt. Our expectation is that in this type of market if next year, fiscal year 2017 looks like fiscal 2016 we could experience this level of inventory obsolescence again.

Okay. I wanted to shift to OBX rental contract. You said you expect that to go through Q1, does that imply your expense to last throughout the full first question or just part of it? And then secondarily is there potentially even extend into Q2 or beyond that potentially?

Well, we expected to go through full timeframe of the first quarter. There are always possibilities of an extension, but that's not some we're relying on or have real expectations of.

Great. Thank you.

And at this time, I'd be happy to return the conference over to Mr. Rick Wheeler for any concluding remarks.

Well thanks, Leo. And thank to everyone that joined our conference call today and we appreciate it and we look forward to speaking with you during our fiscal year 2017's first quarter conference sometime in February. So thanks again and good bye.

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