Greetings and welcome to the Mitcham Industries Third Quarter 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. It is now my pleasure to introduce your host, Mr. Jack Lascar. Thank you, Mr. Lascar. You may begin.

Thank you, Audrey. Good morning and welcome to the Mitcham Industries Fiscal 2017 third quarter conference call. We appreciate all of you joining us today. Your hosts are Guy Malden, Co-Chief Executive Officer and Executive Vice President of Marine Systems; and Rob Capps, Co-Chief Executive Officer 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 for 90 days 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 22. 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, December 8, 2016 and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening 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, 2016. 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. I would now like to turn the call over to Guy Malden. Guy?

Thanks, Jack and good morning, everyone. We would like to thank you for joining us today for our fiscal 2017 third quarter conference call. I'll begin by making some general comments about the quarter. Rob will then discuss our financial results in more detail, and address our market outlook. We will then open the call for questions. Turning now to our third quarter results. Although, our financial results do not reflect it, we believe we are seeing signs of improving conditions within both segments of our business. The Equipment Manufacturing and Sales segment generated slightly lower sequential revenues. Approximately $4.5 million of orders that we had anticipated shipping in the third quarter were delayed due to a combination of third-party suppliers' inability to provide certain equipment and some internal engineering and manufacturing issues. The year-over-year decrease was also magnified due to higher than normal Seamap system sales during the last year's third quarter. However, our outlook and overall optimism for the segment continues to rise. We expect our fourth quarter results in the Equipment Manufacturing segment to be much improved. Some of the third quarter shipment delays were related to our next generation sonar products. As is often the case with new products, we did experience some delays from our initial expectations. However, we believe these issues have been resolved and we are now shipping orders for these products. Due to a more stable nature of the non-oil and gas related contracts within our equipment and manufacturing business, we have greater visibility than perhaps we have had historically. Based on our bookings and the many opportunities available worldwide, we are optimistic for even stronger results in the next fiscal year. We recently received two significant orders for the coming year and are seeing more proposals and bids on projects outside…

Thanks, Guy. I’ll begin by giving you a more detailed review of the financial results and then I'll make some comments about our views on the current market and near-term market. Let me start with our Equipment and Manufacturing sales segment, which include Seamap, Klein and product sales from S.A.P. or SAP, our Australian subsidiary. Revenues for this segment as a whole totaled $5.3 million in the quarter, compared to $10.1 million in the third quarter a year ago. Seamap revenues were $2.5 million in the quarter, which is down from the $10 million in the third quarter of last year. We had one large order that we had anticipated shipping in the third quarter slipping to the fourth quarter due to late arriving customer supply components. Last year’s third quarter also benefited from the deliveries in very sizable orders. Sales from Klein this quarter were $2 million as there are no comparable sales a year ago since we acquired Klein in December of last year. Our Klein sales were mostly to customers outside the oil and gas industry. As Guy mentioned, Klein’s results in the quarter were negatively affected by few engineering and manufacturing issues related to new products. These issues caused us to miss our original scheduled permission for shipping certain orders. And we believe these issues have been resolved and we are now starting to make up ground. Finally, our SAP products sales were $1.4 million in the quarter compared to $151,000 in the year ago period. SAP benefited from favorable project timing as quarter-to-quarter movements and the timing of shipments kind of a sizeable impact on revenues there. Now included in the amounts I've just talked about, our intra-segment sales of about $600,000 and I know these are eliminated in our consolidated results of course. Revenues…

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Tyson Bauer with KC Capital. Please proceed with your question.

Good morning, gentlemen.

Hey, Tyson.

When you talked about the $4.5 million in delays, do you expect to recoup that full amount in Q4, plus your normally scheduled business? Or are we seeing a shift to the right, where we pick up some of that in Q4, but we'll just kind of move some of that into fiscal Q1 and then forward?

For the most part we’ll pick that up in the fourth quarter.

So between Q3 and Q4 it will pretty much be on schedule as what you originally thought after Q2?

Pretty darn close.

In regards to the Asian contracts that you picked up for delivery in fiscal 2018, any time table there to those? Are those later in the year? And then also, the purpose of those is it more scientific-based that they are going to use them for, or do you know?

Yes, we do know Tyson, right now it looks like Q1 and Q2, there's two separate systems. It is more scientific-based. These are combination hulls, in other words multipurpose hulls as we spoken in previous calls that have seismic capability, but more importantly hydrographic, oceanographic capabilities. So it’s a combination of equipment and they're obviously outside, as we said outside of North America.

Is the margin profile better for some of these industries outside of oil and gas, or is it pretty much consistent across the board?

I think they're very consistent across the board.

Okay. Now that we have the elections, I always feel compelled to ask a Trump question.

Okay.

There has been talk about undoing some of the executive orders regarding shutting down the expiration in the Gulf Coast closer to Florida, West Coast, Arctic Circle, some of these other topics that have been kind of closed off. Does that give you more optimism that those could be reopened, or doesn't that matter if it is reopened if there is nobody interested in exploring those areas?

Yes. I think it all comes down to exploration budgets. That’s the key.

It’s certainly not bad news, but I don't know that by itself is caused to have celebration.

We have seen some easing in Mexico with Pemex regarding foreign investment and other players, giving them a little more control. Does that help you out in the Western Gulf to maybe stimulate some activity down there?

Potentially there's been a lot of activity offshore in the Western Gulf particularly Mexico, with a lot of our current customers acquiring multi-client data et cetera, et cetera. We don't necessarily benefit directly from that on the leasing side. All those vessels for the most part have our Seamap equipment onboard, so there is some benefit there. Is it directly tied to sales? Probably not. But the continued focus in Mexico both onshore and offshore, onshore in particular with lease sales and things like that could have some potential impact on the leasing side, right.

When you talk about the initial inquiries that you are starting to see a pick up in activity, especially maybe in Europe and some of these other areas, are those typically the larger entities. Do you have the wherewithal to kind of be first in exploration, or are these some of the smaller wildcatters that can take on a little more risk in speculation?

Well, it’s a combination, but I think typically it tends to be the larger entities, although not necessarily super majors, but you certainly have the NOCs involved in many cases, in some of the larger entities. So I think the stuff we are seeing outside of North America in particular tends to be a little more financially stable into these involved.

Okay. And last question in regarding the defense contracts, obviously a longer duration than usual in procuring those contracts based on budgets and other things; do you have an idea of scope, time table, when you may get those initial contracts? And also, are you authorized to sell to foreign governments for their defense programs, or is this U.S. only?

No it's combination, it is U.S. Navy, but it's also foreign navies as well and of course, we do go through a complete vetting process through Department of Commerce and Department of State as far as license requirements et cetera, et cetera for export. And that is a process. We know the process extremely well and so when these projects do come to even a bidding stage, we start the export license vetting process at that time. So we kind of keep things running concurrently.

Okay. Thank you, gentlemen for my one question and one follow-up.

Thanks, Tyson.

[Operator Instructions] Our next question comes from the line of Greg Hillman with First Wilshire Securities. Please proceed with your question.

Hey. First of all, could you give a little more detail or color on Latin America in particular? Like Colombia, whether could it get much bigger than what it is and maybe some other countries, like Argentina, for example for your traditional equipment leasing business?

Well, I think I wouldn't characterize Colombia is getting bigger from – I think we're seeing a little bit more stable. There are a number of projects scheduled to take place in the coming year, so we're – I think feeling little more confident about it, a little more stable business there. Again, not going back to the 2012 levels, let's be clear about that. I think outside of that there are some pockets and potentially very large projects in areas such as Brazil and Bolivia as we mentioned. And so those are kind of happen or they don't happen, but there certainly is activity planned there. Argentina is a bit of a different animal. It's a difficult market for lots of reasons, although it is improving. For most part of the seismic activity there has been conducted by one entity and so we have not done business in Argentina for some time, although it is potentially a market for us going forward.

Okay. And on the non-oil side, could you just talk a little bit about what is the synergy between Seamap and Klein? And can you talk about the R&D effort at both those companies and how they go about R&D, whether it is just customer focus, or whether there is any more blue sky type stuff.

Sure. Greg. First of all between Seamap and Klein there are some customers that crossover and these are the customers that are the institute's that provide some amount of seismic, it may not be traditional oil and gas seismic activities, but more earthquake monitoring et cetera. So you've got equipment on hulls that are both for non-oil and gas earthquake monitoring type activities as well as hydrographic and oceanographic activities. We may have talked about this before, but the synergy between the two companies. If you look at the electronics packages, they're in housing, they're in a very high shock environment, you've got power and telemetry issues that are basically the same, you get data up to a top side unit. So when you actually look at the systems, what we're trying to accomplish with data out in the ocean they're very, very similar. From a project engineering perspective, there is a mechanical platform and electronics platform and then a top side with a graphical user interface that you can plug in a number of third-party software and hardware. What we've started to do is crossover between the two engineering groups on light type projects where we can crossover resources particularly on the mechanical side to begin with. As opposed to customers, it's more about products, as opposed to a customer focus.

Okay. And just another question on border security for countries, or even the United States border. For example, can use your hydrophones or not I guess your traditional seismic equipment to detect tunnels at the border of Mexico and the United States?

I mean traditionally or historically we don't believe our equipment has been used in that application. Again, those are both geophones and hydrophones have different frequency. Klein has a product called waterside security that provides a platform for port security monitoring, offshore platform monitoring from a vessel intrusion, diver detection et cetera, which is starting to gain a bit more traction. We've got very high hopes that moving forward certainly in the political environment around the world that this product will see some additional traction.

Okay. And is it being used in the United States, or it's just being used outside of the United States right now?

Both.

Okay. Thanks gentlemen.

Okay, Greg.

Thanks, Greg. End of Q&A

[Operator Instructions] I'm showing no further questions at this time, so I will turn it back to management for closing remarks.

Thank you. We’d like to thank you once again for joining us on this call, and for your interest in Mitcham Industries. We look forward to talk to you once again at the conclusion of our fourth quarter.

Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day.