ION Geophysical Corporation Q1 2010 Earnings Call Transcript - TheStreet

ION Geophysical Corporation Q1 2010 Earnings Call Transcript

ION Geophysical Corporation Q1 2010 Earnings Call Transcript
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ION Geophysical Corporation (IO)

Q1 2009 Earnings Call

May 06, 2010 am ET

Executives

Jack Lascar - IR, DRG&E

Bob Peebler - CEO

Brian Hanson - EVP and CFO

Analyst

Daniel Burke - Johnson Rice

Jim Macari - Neuberger Berman

Presentation

Operator

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Good morning, ladies and gentlemen. Thank you for standing by and welcome to the ION Geophysical first quarter earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator instructions) This conference is being recorded today Thursday, May 6, 2010.

I will now like to turn the conference over to Jack Lascar of DRG&E. Please go ahead sir.

Jack Lascar

Thank you Britney and good morning and welcome to ION Geophysical Corporation's first quarter earning conference call. We appreciate your joining us today. Your host today are Bob Peebler, Chief Executive Officer, and Brian Hanson, Executive Vice President and Chief Financial Officer.

Before I turn the call over to management, I have a few items to cover. If you would like to be on an email distribution list, to receive future news releases, or experience a technical problem and didn't receive yours yesterday, please call us at 713-529-6600 and let us know.

If you would like to listen to a replay of today's call, it is available via webcast by going to the Investor Relations section of the Company website at www.iongeo.com or via a recorded instant replay until May 20. The information was provided in yesterday's earnings release.

I should also point out that we will be using PowerPoint slides to accompany today's call. They are accessible via link on the home page of ION's website. Information reported on this call speaks only as of today, May 6, 2010 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 results or performance to differ materially 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 December 31, 2009, and in its quarterly reports on Form 10-Q.

Furthermore, as we start this call please 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 will now turn the call over to Bob Peebler.

Bob Peebler

Thanks, Jack. And good morning. We are very pleased to have finalized our INOVA joint venture at the end of last quarter and I’m confident that we will gain significant benefit for share the land business that will flow from the venture.

In addition we now have a much strong balance sheet including the greatly reduced debt load going forward. Although we had some significant one-time charges related to closing the transactional Brian will review in detail, our underlying business results during the quarter, were generally what we expected and we’re closed during internal plans.

As expected our equipment businesses both Land and Marine were slowed as our contracted customers continue to postpone equipment buying decisions until their excess capacities absorbed with increasing activity.

The good news is our customer’s businesses do seem to be slowly strengthening in certain areas and we are starting to see a pipeline of opportunities beginning to grow. One additional drag on our Land business in the first quarter was the fact that sizable portion of the China market was on hold waiting for the joint venture to close.

For the first time in a long time, we had zero business during the quarter from our Chinese customers. Even though China was weak in the first quarter, we saw a real momentum in other regions with Mexico standing out as a strong example of the success we are having with an integrated solutions approach that directly targets E&P operators.

As most of you know, Pemex is a sole E&P operator in Mexico. During the first quarter, Comesa, Pemex’s part owned seismic subsidiary finished the third in a series of full-wave seismic surveys using FireFly. Comesa’s productivity improves steadily throughout the three projects which were conducted in the diverse array of operating environments including mangrove swamps and urban areas.

Our GXT imagining solutions group processing the data and working side by side with Pemex to interpret both conventional and full-wave seismic data to optimize decisions related to exploration and reservoir development.

In addition, and not directly related to these FireFly surveys, GXT also entered into a long term processing contract with Pemex that will provide GXT with more visibility into the revenue streams of Mexico over the next several years. Moreover, it may open up additional opportunities for ION both in processing and in our other business lines.

Another positive first quarter development is that for the first time in roughly two years we are beginning to see some early signs of buying activity among the land contractor customers. One early indicator in the strengthening we are seeing and it is in our Sensor geophone business. Sensor has a significant market share and has a solid presence in the number of key markets. Particularly North Africa and the Middle-East.

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