Greetings and welcome to the Mitcham Industries third quarter conference call. [Operator Instructions] I would now like to turn the conference over to Mr. Jack Lascar. Thank you, Mr. Lascar. You may now begin.

Thank you, Manny. Good morning and welcome to the Mitcham Industries fiscal 2016 third quarter conference call. We appreciate all of you joining us today. Your host is Co-Interim Chief Executive Officer Rob Capps. 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 www.mitchamindustries.com, or via a recorded instant replay until December 23. Information on how to access the replay was provided in yesterday's earnings release. Information reported on this call speaks only as of today, Wednesday, December 9, 2016; and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay or transcript reading. 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, 2015. 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. With that behind us, I would like to turn the call over to Rob Capps.

Thanks, Jack, and good morning, everybody. We'd like to thank all of you for joining us today for our fiscal 2016 third quarter conference call. Let me begin by making a few general comments about the quarter and market conditions before moving on to our financial performance in detail. I'll then open up the call to your questions. Turning now to our third quarter performance. Our leasing business continues to reflect the ongoing weakness that has characterized the overall seismic exploration market over the past several quarters. Leasing revenues were down materially from a year ago, and sequentially revenues were down moderately. On the other hand, our strong Seamap results reflected ongoing demand for our products and the benefit of three orders that were delayed from the second quarter, as revenues were up markedly both sequentially and year-over-year. In our leasing business, we're still seeing the lingering issues that have long been weighing on the industry that is very little exploration activity and an abundance of available seismic equipment. Our North American revenues posted a small sequential improvement, but both the U.S. and Canada remained at very depressed levels in terms of overall activity and are below year-ago levels. In the U.S., given current oil prices, record crude stocks and continued high production levels, there has been a little new exploration activity. And with so little visibility into the timing of the recovery in prices combined with tenuous financial position that many E&P companies find themselves in, we believe that activity won't return in any meaningful way, until fundamentals stabilize and the market gains greater confidence with sustained higher commodity prices. Canadian activity remains weak. There will likely be sequential improvement in the fourth quarter, although the winter season has been shaping up much as we anticipated, that is similar…

[Operator Instructions] The first question comes from Ken Sill of Seaport Global.

Couple of questions, on Seamap, you had three systems delivered plus some other business in Q4, and you're saying you've got one complete system being delivered -- I'm sorry, in Q3, got to get that right, and one system coming in Q4. So I think based on last quarter conference call, there was $6 million in revenue deferred from last quarter into this quarter, which means --

That's about right.

That's about right, so should we be looking for something between Q3 and Q2 or closer to Q2 in terms of revenue for Q4?

Between the two, fairly closely Q2 than the Q3, I'm not thinking about that level though.

And then, give a little bit more color on the provision for doubtful accounts. I guess we've had these for the last couple of quarters. So is this a specific customer or just an increase in the provision based on AR and what's going on?

It's not a specific customer, Ken. It's more recognition of the -- we know some of our customers are under stress, so we just think it's prudent to provide a bit more as we go forward.

And what would be the after-tax impact to that one?

I mean, roughly $400,000, $450,000, something like that ballpark.

And then we can go over -- I need to talk to you offline about some of the regional leasing numbers. But it's interesting when you talk about seeing opportunities for some of these systems internationally and for Seamap in Asia, and I know you don't have a lot of visibility, but what do you think with the market today, the timing would be to kind of getting better visibility or seeing some of these potential things turn into actual business? When should we be looking for that?

That's tough to say, Ken. As you know, projects tend to be delayed these days. Things move to the right a bit, so it's really hard to say when that can happen. We could see some things turn up in the near-term as we get into the New Year, but you just don't know for sure.

The next question is from Tyson Bauer of KC Capital.

A couple quick questions. Given your type of business, D&A is such an important line item. As we go forward, we had very minimal additions this year. Given your normal depreciation schedule, your ramp down can be rather quick, which is very important to your cash flow operations. Give us an idea of that D&A schedule ramp down, and when does that accelerate as we get into 2016, 2017, if we're still kind of in this slower period for the industry?

I don't have the exact numbers in front of me. You can kind of see that we went down from $8.6 billion last year's third quarter to $7.2 million this year’s. So that's a pretty dramatic decline. We certainly will continue to see that differential as we go into next year and probably accelerate slightly, just to give you a sense of magnitude.

And we get out to -- normally what is it, four years on the equipment?

No, and it's anywhere from 3% to 7% or probably average of about 5.5% is good.

I'm within the range. Talk about assets and given pricing in the industry, is there a risk given that short life of asset life, where we could see some write downs if this were to persist for a longer term?

We don't think so, Tyson, that's something we look at very carefully every quarter. So we just don't think so. Given our depreciation schedule, we just don't see exposure there.

And this may be looking forward a little bit, but you get into your seasonal slow period in the summer months given the comments you made on some of the regions this past quarter, would it be fair to expect that we will not be able to maintain positive cash flow through those summer months?

I wouldn't necessarily say that.

And does the situation now that we have with Canada and North America and those things, even though we're not making money at this point in time, the tax situation, do we have to do any tax considerations as we get into the end of the year if we have expectations for further losses?

I'm not sure, I quite understand the question.

Just wondering if we have to reverse any kind of tax accounts or otherwise?

Again, that's something we look at very carefully every quarter. We have provided some valuation allowances in certain jurisdictions, but not all. And so again, we thank where we are today, we're in a good shape on that. That is something we look at every quarter.

The next question is from Sheldon Grodsky of Grodsky Associates.

I assume that you guys are quite grateful that you went into this downturn with very little debt on your balance sheet. So I congratulate you for that. The first question, it was a kind of enigmatic news item I saw about you registering to sell preferred stock. Could you give any insight into that? Is that tentative, or what's the idea?

Sheldon, we are in registration on that, so I really can't comment too much on that filing. But we didn't file an S-1 for the potential sale of some preferred stock. It's in process now, and I really, because the registration process, can't comment on them.

Second question, you may have touched upon this already, in the question about writing off equipment, how difficult is it to preserve your equipment when it's idle? Do you just put it in a warehouse in a controlled environment and you don't have to do too much else?

That's basically right. I mean it is very easy to maintain. We always -- whenever equipment comes off a job it's always repaired and put back in top operating condition. So you can put it on the shelf and it just sits there. So there is no danger of deterioration or things of that nature.

And then in terms of operating expenses, et cetera, you mentioned that the headcount is down and you mentioned that there are salary cuts. Do you think you've already made cuts to the bone in operations, or is there still a little bit left that can be cut, as this depression goes forward?

Well, Sheldon, we think we've taken the appropriate steps to date to even where we are today. There is always more you can do, I mean you know that, and there's always something else to be done and we'll continue to kind of evaluate the circumstances and the situation in light of the business we have. We're comfortable as to where we are today at least.

The next question is from Ken Sill of Seaport Global.

Just wanted to follow up, in terms of some housekeeping here. Your SG&A, talking about costs, has come down quite nicely. How do you think that's going to move forward in Q4? And even as we move into next year, is there going to be any change in accruals that are going to cause that SG&A number to bounce around a little bit over the next couple of quarters?

Not too much, Ken. I mean there's a little bit of seasonality to our SG&A, in terms of audits, things of that nature. So it tends to bump a little bit in the fourth and first, but nothing dramatic. There is still some of the things we did earlier in the year, we didn't fully see the impact in the quarter. But for the most part, I think it's going to be pretty comfortable.

So just we're kind of where it's going to be for the next two quarters anyway?

Yes.

Thank you. We have no further questions at this time. I would like to turn the conference back over to management for any closing comments. End of Q&A

I'd just like to thank everyone for joining us today. And I look forward to visiting with you on our fourth quarter call next year. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. And thank you for your participation.