ION Geophysical Corporation. Q2 2010 Earnings Call Transcript

ION Geophysical Corporation. Q2 2010 Earnings Call Transcript
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ION Geophysical Corporation (IO)

Q2 2010 Earnings Call

August 5, 2010 10:00 AM ET

Executives

Jack Lascar – DRG&E.

Bob Peebler – Chief Executive Officer,

R. Brian Hanson – Executive Vice President, Chief Financial Officer.

Analysts

James West – Barclays Capital

Terese Fabian – Sidoti and Company

Presentation

Operator

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Welcome to the ION Geophysical Second Quarter Earnings Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. This conference is being recorded today, Thursday, 5 August 2010.

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

Jack Lascar

Thank you, Luc, and good morning and welcome to the ION Geophysical Corporation’s second quarter earnings conference call. We appreciate your joining us today. Your hosts 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 e-mail distribution list to receive future news releases or experienced 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’s website at www.iongeo.com or via a recorded instant replay until August 19. The information was provided in yesterday’s earnings release. I should also point out that we will be using some PowerPoint slides accompanying today’s call. They are accessible via link on the home page of ION’s website at www.iongeo.com.

Information reported on this call speaks only as of today, August 5, 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 risks 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 to Bob Peebler.

Bob Peebler

Thanks, Jack. And good morning. Let me start by addressing what is on many of our investor’s minds and that is the impact of the Gulf of Mexico oil spill and ION business. In the near term, the only that impact was the short term tests to a multi clients business which we have to make was $9 millions to the quarter. The $9 million includes $4 million of actual Gulf of Mexico data sales and the balance with BT related to other parts of the world. We’ve been assured that this was a clienting [ph] issue related to management distraction which slowdown their approval process.

You will likely seen this expected second quarter sales be completed later in the year. Our Gulf of Mexico data library is very mature and does not represented the significant portion of our future business as majority of our new venture projects are in places like the Arctic, Brazil and the West Coast of Africa. The only other area have some concerned with the Arctic projects but we have not had any indications or reduced interest by all governance since our efforts involves very restate exploration in the library to use for fundamental based and understanding normally years ahead with any drilling operations.

Also we don’t believe our marine equipment business will be impacted since our customers vessels moved from place to place around the world. The only other exposures would be through our data processing business and we still have solid backlog that should underpinned another record year for this group.

It’s too early to tell what the long term impact might be on our EP [ph] business but we are starting to mitigate any potential long term risks to expanding our business into other international markets such as Mexico. In summary, we believed at this time, that the impact to our business is minimal this year and somewhat uncertain over the long term.

Now, more specifically to our business this quarter, first of all, I am pleased that we just reported the profitable quarter even though it was only a penny for sale. In addition, we had efficient strength in our data processing, marine equipment in concepts and software business to help offset while we are confident was in and only in a multi-client business. As previously mentioned, we lost approximately $9 million of sales in the quarter due to the short term impact to the BP spill.

In addition, we had no new venture projects running during the quarter as we are currently focused on the Arctic where the shooting seasons starts in July and runs through a default. We expect a much stronger second half for a multi client business starting in the third quarter based on these current underwritten projects to the Arctic.

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