Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Mitcham Industries Second Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, September 5, 2013. I would now like to turn the conference over to Karen Roan. Please go ahead, ma'am.

Thank you, George. Good morning, and welcome to the Mitcham Industries Fiscal 2014 Second Quarter Conference Call. We appreciate all of you joining us today. Your hosts are Bill Mitcham, President and Chief Executive Officer; and Rob Capps, Executive Vice President and Chief Financial Officer. Before I turn over the call to management, I have a few items to cover. If you would like to listen to a replay of today's call, it will be available via webcast by going to the Investor Relations section of the company's website at mitchamindustries.com or via a recorded instant replay until September 19. Information on how to access the replay was provided in yesterday's earnings release. Information reported on this call speaks only as of today, Thursday, September 5, 2013. And therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay. Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual future results or performance to materially differ from any future results or performance expressed or implied by those statements. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in its annual report on Form 10-K for the year ended January 31, 2013. Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday. And please note that the contents of our conference call this morning are covered by these statements. Now I would like to turn over the call to Mitcham's President and CEO, Bill Mitcham.

Thanks, Karen, and good morning, everyone. I would like to thank you all for joining us today for our fiscal 2014 second quarter conference call. As usual, I'll begin by making some general comments about the quarter. Rob will then discuss our financial performance in depth, before I conclude with a discussion of our market outlook. Then we'll open the call for your questions. While it was a very disappointing quarter, there was some good news. We saw year-over-year growth from some of our international land leasing markets, specifically Europe, Pacific Rim, Asia and Africa. And also, SAP had a very strong quarter as many of the hydrographic and oceanographic projects we've been pursuing for the last several months are now coming to fruition. Despite the growth coming from these markets, we faced substantial challenges in the U.S. and Latin America land leasing markets. The difficult conditions in those particular areas, combined with a temporary soft spot in marine leasing, weighed heavily on our results in the quarter. In the U.S. land market, we saw a continuation of the downward move in exploration activity that began in fiscal 2013, as budgets are being converted to drilling programs rather than new seismic exploration. Activity and revenue coming from the U.S. are well below the levels we saw a year ago. And at this point, there aren't any clear signs of recovery. Another issue that has hindered our leasing business has been the ongoing delay of projects in Latin America due to permitting, labor and security issues. Although there have been several contracts recently awarded to contractors in the region, work has not yet begun on many of these projects. We have a sizable amount of equipment in that region. A large portion is teed up under contract, ready to go, but…

Okay. Thanks, Bill, and good morning, everyone. I'll start as usual by discussing the top line of each of our 2 segments, equipment leasing and Seamap. And then follow with a discussion of the profitability of each of the segments, including the discussion of our consolidated results and our financial position. First, let me review the equipment leasing segment, which includes not only our core leasing business, but also non-Seamap equipment sales, such as occasional sales of our lease pool equipment, new seismic equipment we acquire from third parties, sales of heli-transport equipment we produce and sales of hydrographic and oceanographic equipment from our Australian subsidiary, SAP. Our core leasing revenues in the second quarter were $6.4 million, compared to about $11 million in the second quarter a year ago. That's down 41%, primarily due to declines in land activity in the U.S. and Latin America, as well as lower marine leasing activity. These declines were partially offset by higher land leasing revenues in Europe, Pacific Rim, Asia and Africa. As Bill mentioned, we believe the softness in the marine leasing market is temporary. However, the situation has continued into the third quarter, and we don't expect see a material improvement until the fourth quarter. We also think it's unlikely that we'll see much improvement in the U.S. or Latin America land leasing markets until the fourth quarter. Moving to equipment sales -- our lease pool equipment sales rather, revenues were $2.1 million in this quarter, compared to $3.2 million in the second quarter last year. Other equipment sales, which include heli-picker equipment and sales of hydrographic and oceanographic equipment from SAP, were $5.4 million, compared to $1.7 million in the same quarter a year ago. This is largely driven by SAP deliveries for a variety of projects in the…

Thanks, Rob. Our overall results were directionally pretty much as we had anticipated. However, the magnitude of the declines in the leasing business were very disappointing. Although crude prices have been very supporting and are near a 52-week high, budgets in the U.S. land markets have shifted in favor of drilling and away from seismic exploration at this point. However, given the importance of seismic data in not only exploration, but also the development of reserves, as well as reservoir management for the production of oil and gas, the longer-term prospects for seismic activity remain healthy. We said this in the past, but it bears repeating. This is a cyclical business and during any down cycle, we have always tried to position ourselves to prepare for the next upturn. And that's exactly what we're doing right now, we're very strong financially, as Rob said earlier, $57 million of working capital, including cash and cash equivalents of $20 million. No debt and a new undrawn $50 million revolving credit facility. We'll continue to rationalize our lease pool by region in response to the changing market conditions and look for significant opportunities to expand our business in other regions of the world. As the leader in the seismic leasing market, we are not only uniquely positioned to acquire new and used equipment on favorable terms, but also have the necessary infrastructure and support to quickly deliver this equipment on short notice to our customers in any region of the world. While the U.S. seismic market remains soft and bidding activity has been low, the international market, which usually accounts for about 85% of our leasing revenue, appears much more favorable in terms of incremental work. Europe is now a bright spot, as we currently have several jobs in process or pending equipment…

[Operator Instructions] Our first question is from Ryan Fitzgibbon with Global Hunter Securities.

Bill, maybe if I could follow up on your last comments there. When we think about Latin America and the delays you've seen in the country there impacting Q3, is it safe to assume it's going to be difficult for equipment leasing revenues to match where you were a year ago, given the softness in Latin America?

This is Rob. You cut out a little bit there. But I think what you asked was would it be difficult for leasing revenues to match last year given the softness we've seen in Latin America? I think that's true. Obviously, those delays have gone on longer than we had anticipated, more than anyone anticipated. So yes, you're right, some of these projects are getting moved into next year, clearly. But there just isn't enough days in the year to get them all done now.

Okay. And can you remind us how many channels are in the lease pool at quarter end, and maybe how many of those were actually committed to Latin America?

We've got about close to 30,000 in South America right now, Latin America right now.

Out of 220,000 in total.

5,000, 6,000 of those are wells.

Right.

Next question, it sounds like you're fairly optimistic on Russia. Any sense as to maybe how many channels you could potentially work there in maybe Q4 of this year?

Well, we have about 20,000 there. We actually have more than that between the 2 companies, but 20,000, 25,000 between Russia and Mitcham Europe. So I think that right now, we're looking to see all -- we're looking at all of those to be utilized during the Russian winter and possibly having to send some more equipment into that area.

Excellent. And then 2 final questions, more on the capital allocation side. Can you add on a little bit more on what you plan on spending the capital, call it $50 million, in the back of this year on? Is it more cable or is it more wireless equipment? And is it backed by jobs that operators have already won?

It's a little bit of both. There certainly is some cable equipment we are looking at for specific markets and for specific demand, frankly, in the Eastern hemisphere primarily. Other than that, I think we have mostly cableless, will be most of the additions for a variety of markets. And those certainly will be for specific demand. If we don't -- we have the demand identified, but for whatever reason it doesn't develop, then we'll delay those purchases.

Okay. And then finally, you mentioned in the release that soft market, you may -- may create some opportunities, you guys have a lot of liquidity. Are you seeing anything of interest on the M&A front?

Well, we're always looking at that. And I can't go and say much about that, other than we are always looking and there are opportunities out there, we think.

Our next question is from Veny Aleksandrov with FIG Partners.

My first question is on Latin America. So you're slow right now, but you're saying that there are significant contracts signed, but there are still probably delays. Is it due because of the permitting to process that they changed or the permitting process just changed back to previous law, but it's just labor issues and permitting delays?

Well, Veny, I'll tell you what, it's a variety of issues. Clearly, the permitting practices have changed. Some of the localities in Colombia, specifically, have the ability to control the permitting activity as opposed to letting the central government control it. So this is kind of like -- it's their choice. It's like the states here being able to control things versus the federal government. In some cases, in some areas, the state has taken that over. In those areas, it has just become very difficult to get permits, to arrange labor. Labor demands have become much more onerous from some of the localities. And those just become a very difficult environment. Also, we had the issue, very recently, there was a general strike in Colombia, last week actually, which just ended up over the weekend, which certainly has delayed things as well. So it's a variety of things. But I think the underlying factor is the change in the permitting and who's controlling that now is different than it used to be in some areas.

Okay. And then the U.S., it is -- the demand is not there, but how plenty [ph] it is, how many channels do you currently have in the U.S. and what's the utilization rate?

Veny, we've got -- I mean we move equipment all over the world. So it's not about having equipment in one location that's a drag on anything. I mean, we can move the equipment in a day. We can move thousands of channels. What do we have here, I don't know, 8,000 to 10,000 at most. We could certainly take care of any job out of our -- if we needed more than 8,000 channels, or 10,000 channels, we can take care of that. So it's not a drag. We can move it quickly.

The utilization here is quite low at this point, as you can imagine.

And my last question is on the other sales which did very well this quarter. And you said that we cannot expect this high of revenue level. I mean, what's the -- these were just big deliveries that you guys were working on for a while, and how can we look at that going forward?

Well, it is -- it's mostly out of SAP, out of Australia, in hydrographic and oceanographic equipment. There is a large project in the Philippines that we have been working on, a couple of deliveries in China. And those tend to be a bit sporadic, as we've just seen. They tend to be larger projects now. We have many others we're working on at this point. So I think SAP will continue to have a very good year from the ocean hydro side. Just don't take this -- this [indiscernible] quarter was and try to extrapolate for the full year. I think that would be a [indiscernible].

And our next question is from Georg Venturatos with Johnson Rice. Georg P. Venturatos - Johnson Rice & Company, L.L.C., Research Division: I just wanted to touch on the domestic markets. It sounds like it's pretty weak across the board. But are there any pockets of strength that you're seeing today?

Not really. I mean, that's the best I can put it. I mean, we have several -- we have more than a handful, maybe a double handful, of bids out, a lot of it for wireless, some cable, but not a lot, for infield stuff, where people are needing a little additional well [ph] access and different things, but not a lot. It's just pretty quiet out there right now for us. So that's the best answer I can give you right now for the U.S. I mean, again, we've got a few things working, but we'll see. Georg P. Venturatos - Johnson Rice & Company, L.L.C., Research Division: Okay. And then kind of on that topic, you mentioned probably aren't going to see any improvement there until Q4. Should we think of that as slightly better than we're seeing today? Or do you actually think we may see a little bit of uptick in spending in Q4 domestically?

Well, I think -- well, there is certainly an opportunity to see a bit of an uptick in Q4, but we're still early days, Georg. I think I'd be pretty cautious about that in the U.S. We have better visibility, obviously, in Europe, Russia and Canada and elsewhere, but the U.S., again, as Bill said, there's things we are working right now, but I'd be pretty cautious. Georg P. Venturatos - Johnson Rice & Company, L.L.C., Research Division: Okay. Great. On the Seamap side, obviously, good to see you guys, looking, you have some systems scheduled for the second half. I was just curious, just wanted to make sure, on the spare parts support side, are we seeing any slowing there as maybe vessel owners are pushing spending there to the right or is that still kind of something they need to do and they're staying on top of?

We're not seeing that slide a bit. It's -- that's something they have to keep doing. And the marine market, in general, is still pretty darn good. And so they've got to keep that up and running.

[Operator Instructions] Our next question is from Joel Luton with Westlake Securities.

Just a little bit more color on North America. I know some of the other companies that reported their quarterly results, they said that they expect it to pick up next year in North America. Do you all think that could be the case or is it just too difficult to tell at this point in time? And when do you think you can tell? Will it be a function of the E&P budgets going into '14 or -- could you put a little color on that?

Joel, I think most of what we're looking at right now, in terms of the requests that we have for quotes, are later in the year, probably first quarter. So I don't see -- do I think we have a pickup next year? I certainly hope so. But if you look at the quotes, a lot of them are, again, are up for next year. So yes, I would certainly hope that there is some pickup opportunities for the first quarter. And I agree with pretty much the consensus that it should be a better year. I can't imagine it be a heck of a lot worse, but every time I say that -- we'll just leave it that.

Thank you. And I'm showing no further questions. I'll turn the call back to management for closing comments.

Okay. Well, George and everybody, thank you for once again for joining us on the call, for your interest in Mitcham. We look forward to talking to you again after the conclusion of our fourth -- our third quarter. We could skip the third -- okay, the third quarter then. Thanks.

Ladies and gentlemen, this concludes our conference for today. We thank you for your participation. You may now disconnect.