Powering Data-driven Decisions
Oppenheimer 6th Annual Emerging Growth Conference
May 11-12, 2021
Disclaimers
2
Forward-Looking Statements
The information herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include information and other statements that
are not of historical fact. Actual results may vary materially from those described in these forward-looking statements. All forward-looking
statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include the risks
associated with the timing and development of ION Geophysical Corporation's products and services; pricing pressure; decreased
demand; changes in oil prices; agreements made or adhered to by members of OPEC and other oil producing countries to maintain
production levels; the COVID-19 pandemic; and political, execution, regulatory, and currency risks. For additional information regarding
these various risks and uncertainties, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with
the SEC on February 12, 2021. Additional risk factors, which could affect actual results, are disclosed by the Company in its filings with
the SEC, including its Annual Report on Form 10-K and any Quarterly Report on Form 10-Q and Current Report on Form 8-K filed
subsequently during the year. The Company expressly disclaims any obligation to revise or update any forward-looking statements.
Non-GAAP Financial Measures
This presentation contains certain non-GAAP financial measures. These measures should not be considered in isolation or as a
substitute for measures prepared in accordance with GAAP. These non-GAAP measures should be evaluated only in connection with our
GAAP results, including those in our Form 10-K. Reconciliations of these non-GAAP measures to the most directly comparable GAAP
measures are in the appendix.
ION – An innovative, asset light global technology company
3
ION
IS
POWERING
DATA-DRIVEN
DECISIONSz
Data Analytics
ION delivers powerful data-driven decision-making
to offshore energy and maritime operations markets.
Transforming information into insights, we enable
clients to improve decisions and results.
InsightsData Analytics
ION – An innovative, asset light global technology company
Technology-focused firm for 50+ years
– Listed on the NYSE under the ticker IO
– HQ in Houston with 10 global offices
– 420 staff, >20% with advanced degrees
Innovative with large IP portfolio
– ~450 patents and pending applications
– ~10% revenues invested in R&D annually
New strategy focused on generating
value and doing fewer things better
– FY-20 $123M rev $18M Adj EBITDA
– FY-19 $175M rev $32M Adj EBITDA
4
HEADQUARTERS
HOUSTON,TEXAS
Please see the appendix for reconciliations to comparable GAAP measures.
2D Subsurface Data
3D Subsurface Data
ION Business Segments and Strategy
5
Overview
Ambition
E&P Technology & Services
~75% Revenues
~$4B Market
Operations Optimization
~25% Revenues
~$10B Market
Subsurface database helps E&P companies
find and develop the lowest cost energy.Mission critical software and hardware optimize
vessel movements and operations.
Increase market share by providing new 3D
multi-client data with higher earnings potential.
Expand software core market success into new
attractive markets, initially E&P logistics and ports.
Diversifying into 2 much larger markets with higher earnings potential
Strategic Focus Areas and Growth Opportunities
6
Core
Core
Rebound
Marlin
& more
3D
Programs
• Diversify technologies into
attractive new markets
- Lessen impact of E&P cycles
- Increase share of recurring
software revenue
Grow
core
Broaden
core
offerings
Diversify
beyond
core
• Expected rebound in core market
- E&P fundamentals recovering
- Increasing data requirement to
rebalance portfolios and
optimize development
• Provide new 3D multi-client data
with higher earnings potential
- Builds on reimaging success
- Key proprietary technology
E&P Market DriversWhy subsurface data remains critical for our customers
0
20
40
60
80
100
120
1990 2000 2010 2020 2030
7
Global liquids production1990 - 2020
Production
Under
development
Discovered
Undiscovered
Continued investment
required to meet demand
Plenty of known reserves, but
at the wrong price point
E&P companies require data
to rebalance portfolios and
maximize value
E&P companies require data
to optimize production
History Forecast
Source: Rystad Energy
Oil and Gas Demand Rebounded Quickly from H1-20 Volatility
Fundamentals rebounded as
pandemic restrictions eased and
oil supply decreased
International, where ION is
focused, has been less impacted
than onshore North America
Expect U-shaped recovery
starting in second half of 2021
8 Source: Rystad Energy (March 2021)
80
85
90
95
100
105
$20
$30
$40
$50
$60
$70
$80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2020 2021 2022
Mill
ion b
pd
Bre
nt
Price U
SD
Global Liquids Supply and Demand: Base CaseUSD, Million bpd
Brent Price Base Case Liquids Supply by Quarter Liquids Demand By Quarter
E&P Technology & Services
9
E&P Technology & Services Operations Optimization
Create digital data assets and deliver services that improve
decision-making, mitigate risk and maximize value.
Multi-client Data Library
Leverage world-class geoscience skills to create
subsurface data underwritten by and licensed to
multiple E&P companies to optimize investments.
0
Imaging & Reservoir Services
Combine proprietary algorithms, AI and
experience to maximize image quality,
delivering enhanced subsurface insights.
Multi-client Subsurface Data Growth EngineIncrease market share by providing new 3D data with higher earnings potential
10
Access Exploration Appraisal Development ProductionE&P
Lifecycle
2D3D
Historical ION Focus Providing New 3D Multi-client Data
Higher resolution
imagery for higher
stakes decisions
Subsurface
Data
ION
A
BC
D
Other
Marine Multi-client
Market Opportunity
ION ~3% of ~$2.3B market,
largely comprised of new 3D data
Opportunity to provide new 3D data,
increasing share of a mature market
with higher, more consistent earnings
0
200,000
400,000
600,000
800,000
2015 2020
2D Data 3D Data
ION Data Library Evolution
Multi-client Subsurface Data Growth EngineIncrease market share by providing new 3D data with higher earnings potential
11
Tier 1 Imaging
Technology
3D Reimaging
MC Credibility
ION Source
Technology
+ + =Mature Market:
Why Shift to 3D Now is
Relevant and Credible
Leveraging technology
and experience
Program Type Collection Cost Return Profile Earnings Potential
2D $3-8m 1.5 - 5X $5-40m
3D Reimaging $0-5m 3 - 8X+ $5-40m+
3D Towed Streamer $20-40m 1.8 - 2.2X $35-90m
3D Ocean Bottom $60-100m 1.6 - 2.2X $90-220m
Why Shift to 3D is
Attractive
Higher, more consistent
earnings potential
Launched Initial
Project in North Sea
Up to 11,000 sq km
acquired 2020-2021
Only takes 1-2 3D new acquisition projects annually to double market share
Costs largely
underwritten
by clients
Offshore Optimization Market Drivers
Cloud computing
– Linking onshore and offshore
stakeholders
Artificial intelligence
– Autonomous vessels
– De-manning operations
Internet of Things
– An explosion of sensors drives
IoT, focusing on data analytics
12
Software integrates data
streams, improving situational
awareness and planning
Digitalization wave taking
place offshore, opportunity to
optimize maritime operations
Smarter, safer management
of maritime assets and people
via subscription model
Engineering & Consulting Services
Devices
Software
Operations Optimization
13
Develop mission-critical subscription offerings and engineering
services that enable operational control and optimization.
Devices
Develop intelligent devices controlled by
our software to optimize operations.
Software
Leverage leading data integration platform to
control and optimize operations in real-time.
Command and Control Actuator Foil
Command and Control Actuator Foil
E&P Technology & Services Operations Optimization
Extending the Reach of our Software Portfolio
14
Survey Design &
Planning
Survey Command
& Control
Operations
Optimization
Subsurface Field
QC & Analysis
Situational
Awareness
Towed
Streamer
Operations
Seabed
Operations
MESA
MESA
Orca
Gator
Marlin
Marlin
Core Software Portfolio Optimizes
Complex Data Collection Operations
Expanded to Optimize
Macro Operations
MESA Orca Gator Marlin
MESA is a leading software package that
provides a comprehensive set of tools for
optimizing onshore, offshore and transition
zone survey design and planning.
Orca is the industry standard in towed
streamer command and control software
utilized on 2D, 3D and high resolution
programs.
Gator command and control software is
designed for ocean bottom, transition zone
and electromagnetic subsurface data
collection.
Marlin marine optimization software
increases safety, security and efficiency
with full operational awareness in
challenging offshore environments.
Marlin Software Growth EngineAir Traffic Control for Marine Environment
Integrates environmental data with operational plans to
make complex offshore operational decisions in real-time
– Vessels, platforms, ocean currents, weather, etc.
Enabled paradigm shift offshore from radio and
spreadsheets to smart enterprise-wide SaaS software
– 150+ deployments to date
15
Real-time Operations
Optimization Market
Proprietary Data Management Platform
Integrated GIS Visualization Layer
Proprietary Application Layer
Diverse Data Inputs
Diverse Market Applications
Offshore Wind Shipping Port Mgmt Harbor Security E&P
GPS/AIS Operational plans Radar GIS Environmental data
Proprietary Data Management Platform
Integrated GIS Visualization Layer
Proprietary Application Layer
Diverse Data Inputs
Diverse Market Applications
Offshore Wind Shipping Port Mgmt Harbor Security E&P
GPS/AIS Operational plans Radar GIS Environmental data
Proprietary Data Management Platform
Integrated GIS Visualization Layer
Proprietary Application Layer
Diverse Data Inputs
Diverse Market Applications
Offshore Wind Shipping Port Mgmt Harbor Security E&P
GPS/AIS Operational plans Radar GIS Environmental data
Diversifying into energy production and ports and harbors
Long-term Maritime Digitalization Prospects are StrongUtilizing the Marlin Platform to Address Additional Markets
16
Ports and E&P Logistics ProgressPort Digitalization Potential (Marlin SmartPort)
90% of goods transported overseas
– >5,000 ports and 50,000 cargo vessels
Marlin ~$500M total addressable market
– 5,000 ports x 5% share x avg $100,000 annual SW
license = potential for $25M annual recurring revenue
Q1-20: 1 very satisfied port launch partner
Q2-20: 1,000 port marketing outreach
H2-20: Completed proof of concept trials, new
requirements defined and in development
Q4-20: Secured contract for 17 CalMac ports
Q1-21: Demo systems deployed with advanced
analytics that enhance decision-making
“The system has been running flawlessly –
successfully replacing outdated manual procedures
and improving efficiency as a result. I would not
hesitate to wholeheartedly recommend them.”
– Port of Montrose, Scotland
Sources: Trade 2.0 Inmarsat Research, United Nations Conference on Trade and Development, World Trade Organization
Reinventing Devices BusinessLeveraging Core Competencies and Technologies to Enter New Markets
17
Long-term Focus:
Waterside Security
Detecting and
managing potential
security threatsCommunications &
Data Management
Sensors
Acoustics
Fluid
Dynamics
Marine Seismic
Navigation Telemetry
In-water
Equipment
Electronics
Initial Focus:
Energy
Monitoring wells,
infrastructure and
environment
Innovations for SustainabilityClimate-smart infrastructure
Adapting our portfolio to sit at the nexus of key industrial
themes, so that ION and our customers can:
– Reduce environmental impact
– Optimize the safety and efficiency of operations
– Minimize greenhouse gasesEnergy
transition
SustainabilityDigitalization
Marlin™ software optimizes the safety,
efficiency, and emissions of offshore
operations
WellAlert™ real-time subsea
infrastructure monitoring assures
safe operating environments
Marlin™ software monitors and logs
marine mammal and fisheries
regulatory compliance
18
$32
$18
$0
$10
$20
$30
$40
FY-19 FY-20
Adjusted EBITDA ($m)
-$48
-$37
-$60
-$50
-$40
-$30
-$20
-$10
$0
FY-19 FY-20
Net Loss ($m)
Annual Financial Results
FY-20 Revenue of $123m, down 30% vs FY-19
– Largely due to COVID-19
FY-20 Net loss of $37m, improvement of $11m,
despite >$50m annual revenue reduction
– Positive impact of ~$40m of cost reductions
FY-20 Adjusted EBITDA of $18m vs $32m in FY-19
Backlog of $20m, up 11% QoQ and 4% YoY
– Increased for second consecutive quarter
Seeing improvement in market fundamentals,
expect recovery starting in H2-21
19 Please see the earnings release for reconciliations to comparable GAAP measures.
$175
$123
$0
$50
$100
$150
$200
FY-19 FY-20
FY Revenue ($m)
EPTS OO
$19
$20
$0
$10
$20
FY-19 FY-20
Backlog ($m)
$23
$1
($7)
($10)
$0
$10
$20
$30
Q1-20 Q4-20 Q1-21
Adjusted EBITDA ($m)
$15
$20$21
$0
$5
$10
$15
$20
$25
Q1-20 Q4-20 Q1-21
Backlog ($m)
Quarterly Financial Results
Q1-21 Revenue declined 49% QoQ and 75% YoY,
compounded by large year-end deal that closed Q1-20
– E&P Technology & Services down 64% sequentially
Lower multi-client sales, lengthy E&P budgeting process
– Operations Optimization down 8% sequentially
COVID-19 related slowdown in offshore seismic activity
Net loss of ($7m) vs ($13m) sequentially and ($2m) a
year ago
Adjusted EBITDA of ($7m) vs $1m sequentially and $23m
a year ago
– >$40m of cost savings from 2020 remain intact
Backlog increased to $21m, up 9% QoQ and 47% YoY
– Increased for third consecutive quarter
$40m liquidity, including $21m revolver borrowings
In April, added $14m to available cash from exchange
offer and rights offering
20 Please see the earnings release for reconciliations to comparable GAAP measures.
$43
$37 $34
$0
$10
$20
$30
$40
$50
Q1-20 Q4-20 Q1-21
Cash & Cash Equivalents ($m)
$56
$27
$14
$0
$10
$20
$30
$40
$50
$60
Q1-20 Q4-20 Q1-21
Revenue ($m)
EPTS OO
2021 Capital Markets Transactions
21
Existing
Bond
(2021)
$121m
New
Bond
(2025)
$116m
Completed $10m registered direct offering in February
Completed bond exchange and rights offering in April
– Bond restructuring
• Exchanged 94% of the existing 9.125% 2nd Lien Notes due Dec-2021 for new 8.00% 2nd Lien Notes due Dec-2025
• Extends maturity 4 years with a lower interest rate
• Convertible feature provides path to convert debt to equity over coming years ($3.00 conversion price)
• Only $7m of bonds due in Dec-2021 remain outstanding
– Rights offering
• Raised $42m out of a maximum of $50m, paid off cash portion of bond exchange and put ~$14m into the business
• Completion of restructuring transactions removes the substantial doubt to continue as a going concern raised in Q4-20
Pre
exchange
Post
exchange
Post
conversion
18m
shares
Debt
converts
to stock
68m
shares
29m
shares
Why ION
22
Technology leader:
Talented team and
strong history of
innovation for 50+ years
Asset light, data-focused:
Creative recurring revenue
business models with high
potential returns
Attractive growth:
Opportunities in ESG,
energy transition,
and digitalization
Significant opportunities to optimize decision-making
in capital-intensive and highly regulated industries
Broadened market:
Expanded into higher
value energy production
and marine technology
Imaging Using Sound WavesSubsurface Imaging is analogous to Medical Ultrasounds
24
Process the data to
image the subsurface
Interpret the data and
make recommendations
Acquire the data using
sound wave technology
Subsurface Imaging Sonogram Imaging
Experienced, Highly Capable Leadership TeamProven Track Records Delivering Returns in Technology & Energy
25
Chris Usher
President and CEO
Matt Powers
EVP, General Counsel
& Corporate Secretary
Mike Morrison
EVP and CFO
Lisa Ruiz
SVP, Human Resources
Ken Williamson
EVP, Innovation and
Strategic Marketing
Dale Lambert
EVP, E&P Technology
and Services
Sheila Rodermund
EVP, Operations
Optimization
Global Data Library>390,000 sq km 3D and >740,000 km 2D
ION 2D Data
ION 3D Data
Multi-client New Venture Process
27
Acquire permit to conduct survey from
government or secure rights to reprocess
existing survey
Seek client interest in program and secure
underwriting (discounted rate for early commitment)
Design the survey with input from
underwriters, local stakeholders and geological experts
Sanction the program if the underwriting is
sufficient and the program is promising
Oversee survey acquisition by third
party contractor
Receive, process, and interpret the data
Survey “goes on the shelf” when processing
and interpretation is complete
Clients can purchase data library off the
shelf
Data is fully amortized after 4 years, but we often have marketing
rights for 10 years
Reconciliation of Non-GAAP Financial MeasuresAdjusted EBITDA in thousands of USD
28
The term EBITDA (excluding non-recurring items) represents net loss before net interest expense, income taxes, depreciation and amortization and other non-recurring charges such as
impairment of long-lived assets. severance expenses and government relief. The term Adjusted EBITDA is EBITDA (excluding non-recurring items) but also excludes the impact of fair value
adjustments related to the Company’s outstanding stock appreciation awards. EBITDA (excluding non-recurring items) and Adjusted EBITDA are not measures of financial performance under
generally accepted accounting principles and should not be considered in isolation from or as a substitute for net income (loss) or cash flow measures prepared in accordance with generally
accepted accounting principles or as a measure of profitability or liquidity. Additionally, EBITDA (excluding non-recurring items) and Adjusted EBITDA may not be comparable to other similarly
titled measures of other companies. The Company has included EBITDA (excluding non-recurring items) and Adjusted EBITDA as a supplemental disclosure because its management believes
that EBITDA (excluding non-recurring items) and Adjusted EBITDA provides investors a helpful measure for comparing its operating performance with the performance of other companies that
have different financing and capital structures or tax rates.
Twelve Months Ended December 31,
2020 2019
Net loss $ (37,112) $ (47,214)
Interest expense, net 13,805 13,074
Income tax expense (benefit) 15,616 8,064
Depreciation and amortization expense 26,296 43,198
Impairment of multi-client data library 1,167 9,072
Impairment of goodwill 4,150 —
Severance expense 3,102 2,810
Amortization of government relief funding expected to be forgiven (6,923) —
EBITDA excluding non-recurring items 20,101 29,004
Stock appreciation rights (credit) expense (2,493) 2,910
Adjusted EBITDA $ 17,608 $ 31,914
Reconciliation of Non-GAAP Financial MeasuresAdjusted EBITDA in thousands of USD
29
The term EBITDA (excluding non-recurring items) represents net loss before net interest expense, income taxes, depreciation and amortization and other non-recurring charges such as
impairment charges and severance expenses. The term Adjusted EBITDA is EBITDA (excluding non-recurring items) but also excludes the impact of fair value adjustments related to the
Company’s outstanding stock appreciation awards. EBITDA (excluding non-recurring items) and Adjusted EBITDA are not measures of financial performance under generally accepted
accounting principles and should not be considered in isolation from or as a substitute for net income (loss) or cash flow measures prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity. Additionally, EBITDA (excluding non-recurring items) and Adjusted EBITDA may not be comparable to other similarly titled measures of
other companies. The Company has included EBITDA (excluding non-recurring items) and Adjusted EBITDA as a supplemental disclosure because its management believes that EBITDA
(excluding non-recurring items) and Adjusted EBITDA provides investors a helpful measure for comparing its operating performance with the performance of other companies that have
different financing and capital structures or tax rates.
(a) Includes reversal of valuation allowance on our net deferred tax assets of $7.7 million resulting from the going concern being removed for the three months ended March 31, 2021.
(b) Includes valuation allowance on our net deferred tax assets resulting from the going concern conclusion of $8.5 million for the three months ended December 31, 2020.
Three Months Ended
March 31, 2021 December 31, 2020 March 31, 2020
Net loss $ (7,254) $ (13,191) $ (2,304)
Interest expense, net 3,262 3,501 3,321
Income tax expense (benefit) (6,849) (a) 5,634 (b) 5,874
Depreciation and amortization expense 4,244 6,686 8,860
Impairment of multi-client data library — — 1,167
Impairment of goodwill — — 4,150
Severance expense — — 3,102
EBITDA excluding non-recurring items (6,597) 2,630 24,170
Stock appreciation rights (credit) expense 7 (1,541) (1,094)
Adjusted EBITDA $ (6,590) $ 1,089 $ 23,076