GlobeNewswire Inc | Aug 11, 2021 04:20PM EDT

August 11, 2021

HOUSTON, Aug. 11, 2021 (GLOBE NEWSWIRE) -- ION Geophysical Corporation (NYSE: IO) today reportedrevenues of $19.7million in thesecond quarter 2021, a 40%increasecompared to $14.0million in the firstquarter 2021and a 13%decreasecompared to $22.7million one year ago.

Net loss attributable to ION in the second quarter 2021 was $23.6million, or a loss of $0.90per share, compared to $5.2million, or a loss of $0.37per share in the second quarter 2020.Excluding special items in both periods, the Company reported an Adjusted net loss attributable to ION in thesecond quarter 2021of$11.1million, or a loss of$0.43per share, compared to an Adjusted net loss attributable o ION of$12.1 million, or a loss of$0.85per share in the second quarter 2020.The Company reported Adjusted EBITDA of$0.1million for the second quarter 2021, compared to$(6.6)million in the first quarter 2021 and$0.2million one year ago. Reconciliationsof special items to the reported financial results andAdjusted EBITDA to the closest comparable GAAP numbers can be found in the tables of this press release.

Year-to-date revenues were $33.8million, a 57%decreasecompared to $79.1million one year ago. Net loss attributable to ION was $30.7million in the first half of 2021, or a loss of $1.47per share, compared to$7.5million, or a loss of$0.53per share in the first half of 2020. Excluding special items in both periods, Adjusted net loss attributable to ION in the first half of 2021 was$26.0million, or a loss of$1.24per share, compared to$7.3million, or a loss of$0.52per share in the first half of 2020.The Company reported Adjusted EBITDA of$(6.5)millionin the first half of2021compared to$23.1millionin the first half of 2020.

At June 30, 2021, backlog, which consists of commitments for multi-client programs and proprietary imaging projects, was $13.9million, a decline from the first quarter 2021 as the Companys Mid North Sea High 3D multi-client program in the North Sea proceeded ahead of schedule this quarter.

We delivered sequential revenue improvement, partly due to starting the second, significantly larger phase of our Mid North Sea High 3D multi-client program in the second quarter.Our strategic decision to participate in the 3D new acquisition multi-client market exposes us to larger scale earnings potential and enables ION to capture existing market share without an improvement in industry conditions.Our team is actively cultivating additional 3D program opportunities, including several with potential to start this year.A key 3D ingredient, our proprietary Gemini source technology continues to perform extraordinarily welland was recently highlighted by Shell for its role in enhancing exploration insights in an eco-friendliermanner. We continue to benefit commercially from the global 2D data collaboration with PGS, which helps diversify both companies geographic exposure to opportunities globally while also increasingsales efficiency.

Operations Optimizationrevenues improved during the second quarter, consistent with increasing global offshore activity.We continue to advance our diversification strategy into ports and offshore logistics. Notably, the Marlin SmartPort deployments across nearly 20 UK ports continue to receive positive client feedback on the value our software delivers, such as enhancing decision-making via simple, visual dashboards. Based on the local success in the UK, our business development team recently expanded outreach in North America, Latin America and Africa.The climate-smart digital infrastructure we are promoting with US Department of Commerce support is garnering significant interest for country-scale digitalization solutions spanning maritime detection, port management andillegal fishing.WellAlert conversations have also advanced beyond our initial target market, receiving positive feedback in a number of regulatory environments and, as a result, we started developing a full-scale prototype.

We expect the seismic market will continue gradually improving yet remain challenging in the near-term. As such, in the third quarter we are implementing a significant cost reduction program targeting$15 millionto $20 million of annualized savings, building on the over $40 million eliminated last year, in an effort to right-size our business while still being able to capitalize on evolving market opportunities.

"In todays rapidly evolving landscape, we are focused on empowering clients to operate more efficiently and sustainably.Our offshore data and digitalization technologies are key ingredients for enabling the sustainable use of marine resources, combating climate changeand optimizing energy development while supporting the transition to renewable sources. We have doubled down on our diversification efforts and expect momentum to continue building as the year unfolds.

At quarter close, the Companys total liquidity of $32.8million consisted of $26.7million of cash (including net revolver borrowings of $19.8million) and $6.1million of remaining available borrowing capacity under the revolving credit facility.

In April 2021, the Company successfully completed its bond exchange and rights offering, whichextendedthe bond maturity to 2025with a lower interest rate anda convertible feature that provides a path to convert thedebt to equity. In total,$116.2 million of New Notes due in December 2025 were issued and10.9 million shares of Common Stock that generated $14 million in net proceeds. A total of$7.1 million of Old Notes remained outstanding and due in December 2021.Although the Companys balance sheet was bolstered by these transactions and revenue in the second quarter improved sequentially, the timing of the market recovery remains uncertain and revenues for the first half of 2021 were lower than expected. These lower than planned revenues will have an impact on second half cash collections necessary to fund the Company's operations and meet its debt and other obligations, therefore triggering a going concern issue for ION.The Company continually evaluates conditions in the capital markets, and will continue to explore additional funding opportunities through private or public equity transactions, debt financing or other capital sources, such as the sale of non-strategic assets to meet its ongoing cash needs.

SECOND QUARTER 2021

The Companys segment revenues for the second quarter were as follows (in thousands):

Three Months Ended June 30, March 31, % June 30, % 2021 2021 Change 2020 ChangeE&PTechnology & $ 11,704 $ 7,236 62 % $ 15,226 (23 )%ServicesOperations 8,010 6,800 18 % 7,505 7 %OptimizationTotal $ 19,714 $ 14,036 40 % $ 22,731 (13 )%

E&P Technology & Services segment revenues were $11.7million for the second quarter 2021, compared to$7.2million for the first quarter 2021and $15.2 million for thesecond quarter 2020. Within E&P Technology & Services, multi-clientrevenues were $9.3million, anincrease of160% from first quarter 2021and adecreaseof 23%from second quarter 2020. The sequentialincreasein multi-client revenues reflects starting the second, much larger phase of our Mid North Sea High 3D multi-client program and an increase in 2D data library sales. The second quarter 2021decreasecompared tosecond quarter 2020 is primarily due to lower volume ofmulti-client sales.A portion of2D data library sales during the second quarter 2021 were attributed to our global 2D data library partnership with PGS.Imaging and Reservoir Servicesrevenues were $2.4million, adecrease of34%from first quarter 2021 andfrom second quarter 2020, due to lower proprietary tender activity.

Operations Optimization segmentrevenues were $8.0million for the second quarter 2021 compared to$6.8million for the first quarter 2021and $7.5 million for second quarter 2020. WithinOperations Optimization, Optimization Software & Services revenues were $3.4million, an18%increasefrom first quarter 2021 and flatto second quarter 2020.The sequential increase is due to increased seismic vessel activity offshore. Devices revenues were $4.6million,a17%increase from first quarter 2021 and a12%increasefrom second quarter 2020 due to higher sales of towed streamer equipment spares and repairs.

Consolidated gross margin for the quarter was 18%, compared to 6%for the first quarter 2021and20%one year ago. Gross margin in E&P Technology & Services was 9%compared to(22)%for the first quarter 2021and15%one year ago, consistent with the increase or decrease in revenues during the period. Operations Optimization gross margin was 33%, compared to36%for the first quarter 2021and31%one year ago.

Consolidated operating expenses were $11.0million, consistent with the first quarter 2021and a9%increasefrom $10.1million in the second quarter 2020resulting from the one-time, non-cash adjustment made to marketing and sales expensesin second quarter 2020.

Income tax expense (benefit) was $8.8millionfor thesecondquarter2021compared to $(6.8)millionfor the first quarter 2021and$3.1million for thesecondquarter2020.The income tax expense for the first andsecond quarter 2021 primarily resulted from the reversal and subsequent re-establishment, respectively, of the non-cash valuation allowanceof $7.7million due to the Companys going concern conclusion.Excluding the valuation allowance, the Companys income tax expense primarily relates to results generated by its non-U.S. businesses in Latin America.

YEAR-TO-DATE2021

The Companys segment revenues for the first six months of the yearwere as follows (in thousands):

Six Months Ended June 30, 2021 2020 % Change E&P Technology & Services $ 18,940 $ 61,740 (69 )%Operations Optimization 14,810 17,405 (15 )%Total $ 33,750 $ 79,145 (57 )%

E&P Technology & Services segment revenues were$18.9million for the first half of2021, compared to$61.7million for first half of2020. Within E&P Technology & Services, multi-clientrevenues were$12.8million, a decreaseof 76%from the first half of2020, primarily due to lower volume ofdata library sales, including a significant 2D data library deal that was closed in the first quarter of 2020 that was not repeated during the first half of 2021. Imaging and Reservoir Servicesrevenues were $6.1million, a decreaseof 29%from first half of2020, due to lower proprietary tender activity.

Operations Optimization segmentrevenues were $14.8million for the first half of2021 compared to$17.4million for the first half of2020. WithinOperations Optimization, Optimization Software & Services revenues were $6.2million, a20%decreasefrom first half of2020 due to reduced seismic vessel activity offshore. Devices revenues were $8.6million, a 10%decreasefrom first half of2020 due to lower sales of towed streamer equipment spares and repairs.

Consolidated gross margin for the first half of 2021was 13%, compared to42%for the first half of 2020, primarily due to the decline in revenues. Gross margin in E&P Technology & Services was (3)%compared to42%one year agoresulting from a significant 2D data library deal that closed during the first quarter of2020 that was not repeated during the first half of2021.Operations Optimization gross margin was 34%, compared to40%one year agoprimarily due to the decline in revenues.

Consolidated operating expenses were $22.1million, a31%decreasefrom$32.1million in the first half of2020partially resulting from thegoodwill impairment recognized in the first half of 2020that was not repeated in the first half of 2021 andthe reduction incompensation expense implemented during the first half of 2020.Excluding the impact of special items from last year, second quarter 2021adjusted operating expenses declined by14% compared to the adjusted operating expenses of$25.8million one year ago.Operating margin was(52)%, compared to1%one year ago. The decline in operating margin was the result of the declinein revenues.

Income tax expensewas $1.9millionfor the first half of2021, compared to$8.9million for the first half of2020.The income taxexpense for the first half of 2021 and 2020 primarily relates to results generated by our non-U.S. businesses in Latin America.

CONFERENCE CALL

The Company has scheduled a conference call for Thursday, August 12, 2021, at 10:00 a.m.Eastern Time that will include a slide presentation to be posted in the Investor Relations section of the ION website by 9:00 a.m. Eastern Time. To participate in the conference call, dial (833) 362-0195at least 10 minutes before the call begins and ask for the ION conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until August 19, 2021. To access the replay, dial (855) 859-2056 and use pass code8154095.

Investors, analysts and the general public will also have the opportunity to listen to the conference call live over the Internet by visiting ir.iongeo.com. An archive of the webcast will be available shortly after the call on the Companys website.

About ION

Leveraging innovative technologies, ION delivers powerful data-driven decision-making to offshore energy and maritime operations markets, enabling clients to optimize investments and results through access to our data, software and distinctive analytics.Learn more at iongeo.com.

Contact

Mike MorrisonExecutive Vice President and Chief Financial Officer+1.281.879.3615

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 the ultimate benefits of our completed restructuring transactions; political, execution, regulatory, and currency risks; and the impact to our liquidity in the current uncertain macroeconomic environment.For additional information regarding these various risks and uncertainties, see our Form 10-K for the year ended December 31, 2020, filed on February 12, 2021, and our Form 10-Q for the quarter ended March 31, 2021, filed on May 6, 2021. Additional risk factors, which could affect actual results, are disclosed by the Company in its filings with the Securities and Exchange Commission (SEC), including its Form 10-K, Form 10-Qs and Form 8-Ks filed during the year. TheCompany expressly disclaims any obligation to revise or update any forward-looking statements.

Tables to follow

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, 2021 2020 2021 2021 2020 (In thousands, except per share data) Service $ 12,366 7,464 $ 15,547 $ 19,830 $ 63,032 revenuesProduct 7,348 6,572 7,184 13,920 16,113 revenuesTotal net 19,714 14,036 22,731 33,750 79,145 revenuesCost of 11,223 9,270 13,267 20,493 35,542 servicesCost of 4,853 3,907 4,880 8,760 9,508 productsImpairment ofmulti-client ? ? ? ? 1,167 data libraryGross profit 3,638 859 4,584 4,497 32,928 Operating expenses:Research,development 3,382 2,947 3,036 6,329 7,044 andengineeringMarketing and 3,179 2,759 1,219 5,938 6,077 salesGeneral,administrativeand other 4,458 5,387 5,801 9,845 14,803 operatingexpensesImpairment of ? ? ? ? 4,150 goodwillTotaloperating 11,019 11,093 10,056 22,112 32,074 expensesIncome (loss)from (7,381 ) (10,234 ) (5,472 ) (17,615 ) 854 operationsInterest (3,299 ) (3,262 ) (3,414 ) (6,561 ) (6,635 )expense, netOther income (4,070 ) (607 ) 6,771 (4,677 ) 7,200 (expense), netIncome (loss)before income (14,750 ) (14,103 ) (2,115 ) (28,853 ) 1,419 taxesIncome taxexpense 8,776 (6,849 ) 3,052 1,927 8,926 (benefit), netNet loss (23,526 ) (7,254 ) (5,167 ) (30,780 ) (7,507 )Less: Netincome (loss)attributable (60 ) 91 (52 ) 31 25 tononcontrollinginterestsNet lossattributable $ (23,586 ) $ (7,163 ) $ (5,219 ) $ (30,749 ) $ (7,482 )to IONNet loss per share:Basic and $ (0.90 ) $ (0.46 ) $ (0.37 ) $ (1.47 ) $ (0.53 )DilutedWeightedaverage numberof common sharesoutstanding:Basic and 26,198 15,718 14,241 20,967 14,236 Diluted

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited)

June 30, December 31, 2021 2020 (In thousands, except share data)ASSETS Current assets: Cash and cash equivalents $ 26,731 $ 37,486 Accounts receivable, net 10,531 8,045 Unbilled receivables 7,127 11,262 Inventories, net 10,783 11,267 Prepaid expenses and other current assets 7,243 7,116 Total current assets 62,415 75,176 Property, plant and equipment, net 8,131 9,511 Multi-client data library, net 55,145 50,914 Goodwill 19,898 19,565 Right-of-use assets 31,594 35,501 Other assets 2,079 2,926 Total assets $ 179,262 $ 193,593 LIABILITIES AND STOCKHOLDERS? DEFICIT Current liabilities: Current maturities of long-term debt $ 26,976 $ 143,731 Accounts payable 24,971 33,418 Accrued expenses 20,151 16,363 Accrued multi-client data library royalties 20,341 21,359 Deferred revenue 1,840 3,648 Current maturities of operating lease 8,360 7,570 liabilities Total current liabilities 102,639 226,089 Long-term debt, net of current maturities 106,861 ? Operating lease liabilities, net of current 34,289 38,372 maturitiesOther long-term liabilities 202 222 Total liabilities 243,991 264,683 Deficit: Common stock, $0.01 par value; authorized100,000,000 shares; outstanding 28,577,886 285 143 and 14,333,101 shares at June 30, 2021 andDecember 31, 2020, respectively.Additional paid-in capital 995,323 958,584 Accumulated deficit (1,042,265 ) (1,011,516 )Accumulated other comprehensive loss (19,398 ) (19,913 ) Total stockholders? deficit (66,055 ) (72,702 )Noncontrolling interests 1,326 1,612 Total deficit (64,729 ) (71,090 ) Total liabilities and deficit $ 179,262 $ 193,593

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)

Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 Cash flows fromoperating activities:Net loss $ (23,526 ) $ (5,167 ) $ (30,780 ) $ (7,507 )Adjustments toreconcile net lossto net cash (used in) provided byoperatingactivities:Depreciation andamortization(other than 1,421 1,008 2,380 1,848 multi-clientlibrary)Amortization ofmulti-client data 5,434 4,681 8,719 12,701 libraryImpairment ofmulti-client data ? ? ? 1,167 libraryImpairment of ? ? ? 4,150 goodwillStock-basedcompensation 493 477 779 1,094 expenseAmortization ofgovernment relief ? (6,923 ) ? (6,923 )fundingProvision forexpected credit 102 ? 498 ? lossesLoss onrestructuring 4,696 ? 4,696 ? transactionsDeferred income 7,743 (83 ) ? 338 taxesChange inoperating assets and liabilities:Accounts (2,157 ) 40,546 (2,955 ) 18,678 receivableUnbilled (3,026 ) (4,746 ) 4,151 (2,080 )receivablesInventories 122 951 339 179 Accounts payable,accrued expenses (5,293 ) (8,618 ) (7,891 ) (6,930 )and accruedroyaltiesDeferred revenue (2,636 ) (821 ) (1,813 ) (466 )Other assets and 1,596 2,012 2,569 102 liabilities Net cashprovided by (used (15,031 ) 23,317 (19,308 ) 16,351 in) operatingactivitiesCash flows frominvesting activities:Investment inmulti-client data (7,432 ) (4,928 ) (12,643 ) (14,596 )libraryPurchase ofproperty, plant (191 ) (201 ) (767 ) (697 )and equipment Net cash usedin investing (7,623 ) (5,129 ) (13,410 ) (15,293 )activitiesCash flows fromfinancing activities:Borrowings underrevolving line of ? ? ? 27,000 creditRepayments underrevolving line of (1,500 ) (4,500 ) (2,750 ) (4,500 )creditProceeds from the 41,836 (a) ? 41,836 (a) ? rights offeringPayments on notespayable and (17,824 ) (b) (767 ) (18,576 ) (b) (1,527 )long-term debtCosts associated (6,890 ) (c) ? (7,696 ) (c) ? with debt issuanceNet proceeds fromthe registered ? ? 9,802 ? direct offeringReceipt ofPaycheck ? 6,923 ? 6,923 Protection ProgramloanOther financing (259 ) 15 (575 ) 5 activities Net cashprovided by 15,363 1,671 22,041 27,901 financingactivitiesEffect of changein foreigncurrency exchangerates on cash, (206 ) 68 (78 ) 538 cash equivalentsand restrictedcashNet increase(decrease) incash, cash (7,497 ) 19,927 (10,755 ) 29,497 equivalents andrestricted cashCash, cashequivalents andrestricted cash at 36,555 42,688 39,813 33,118 beginning ofperiodCash, cashequivalents and $ 29,058 $ 62,615 $ 29,058 $ 62,615 restricted cash atend of period

(a) Represents $30.1million in New Notes and $11.7million of ION's common stock issued in connection with the Rights Offering.(b)Consist of $17.1 million payment for the Old Notes resulting from the Exchange Offer.(c)Represents transaction costs incurred in connection with the Restructuring Transactions.

The following table is a reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets:

June 30, 2021 2020 (In thousands)Cash and cash equivalents $ 26,731 $ 62,540 Restricted cash included in prepaid 2,327 (d) 75 expenses and other current assetsTotal cash, cash equivalents, andrestricted cash shown in consolidated $ 29,058 $ 62,615 statements of cash flows

(d) Relates to letters of credit issued during third quarter 2020, primarily in connection with the Houston office lease deposit.

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESSUMMARY OF SEGMENT INFORMATION(In thousands)(Unaudited)

Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, 2021 2020 2021 2021 2020Net revenues: E&PTechnology & Services:New Venture $ 3,882 $ 1,087 $ 4,686 $ 4,969 $ 6,127 Data Library 5,393 2,484 6,867 7,877 46,998 Totalmulti-client 9,275 3,571 11,553 12,846 53,125 revenuesImaging andReservoir 2,429 3,665 3,673 6,094 8,615 ServicesTotal 11,704 7,236 15,226 $ 18,940 61,740 Operations Optimization:OptimizationSoftware & 3,370 2,844 3,377 $ 6,214 7,804 ServicesDevices 4,640 3,956 4,128 8,596 9,601 Total 8,010 6,800 7,505 $ 14,810 17,405 Total net $ 19,714 $ 14,036 $ 22,731 $ 33,750 $ 79,145 revenuesGross profit (loss):E&PTechnology & $ 1,018 $ (1,607 ) $ 2,264 $ (589 ) $ 25,994 (b)ServicesOperations 2,620 2,466 2,320 5,086 6,934 OptimizationTotal gross $ 3,638 $ 859 $ 4,584 $ 4,497 $ 32,928 profitGross margin: E&PTechnology & 9 % (22 )% 15 % (3 )% 42 % ServicesOperations 33 % 36 % 31 % 34 % 40 % OptimizationTotal gross 18 % 6 % 20 % 13 % 42 % marginIncome (loss)from operations:E&PTechnology & $ (2,691 ) $ (4,853 ) $ 442 $ (7,544 ) $ 18,394 (b)ServicesOperations 244 (820 ) (474 ) (576 ) (3,733 ) (c)OptimizationSupport and (4,934 ) (4,561 ) (5,440 ) (9,495 ) (13,807 ) otherIncome (loss)from (7,381 ) (10,234 ) (5,472 ) (17,615 ) 854 operationsInterest (3,299 ) (3,262 ) (3,414 ) (6,561 ) (6,635 ) expense, netOther income(expense), (4,070 ) (a) (607 ) 6,771 (d) (4,677 ) (a) 7,200 (d)netIncome (loss)before income $ (14,750 ) $ (14,103 ) $ (2,115 ) $ (28,853 ) $ 1,419 taxes

(a)Includes the loss on restructuring transactionof $4.7 million for the three and six months ended June 30, 2021 resulting from the exchange of our Old Notes for New Notes.(b)Includes impairment of multi-client data library of $1.2million for the six months ended June 30, 2020.(c)Includes impairment of goodwill of$4.2million for the sixmonths ended June 30, 2020.(d)Includes amortization of government relief funding of $6.9 million for the three and six months ended June 30, 2020.

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESSummary of Net Revenues by Geographic Area(In thousands)(Unaudited)

Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, 2021 2020 2021 2021 2020Europe $ 6,599 $ 4,366 $ 4,684 $ 10,965 $ 46,684 Africa 6,479 1,772 4,117 8,251 60,684 Asia 3,437 2,201 2,631 4,575 30,722 PacificLatin 1,072 3,503 7,992 5,638 13,242 AmericaNorth 934 1,208 2,204 1,432 10,083 AmericaMiddle 704 727 942 2,141 7,347 EastOther 489 259 161 748 5,917 Totalnet $ 19,714 $ 14,036 $ 22,731 $ 33,750 $ 174,679 revenues

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESReconciliation of Adjusted EBITDA to Net Loss (Non-GAAP Measure) (In thousands) (Unaudited)

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, severance expenses,government relief and loss on restructuring transactions. The term Adjusted EBITDA is EBITDA (excluding non-recurring items) but also excludes the impact of fair value adjustments related to the Companys 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.

Three Months Ended Six Months Ended June 30, June 30, March 31, 2021 June 30, 2021 2020 2021 2020Net loss $ (23,526 ) $ (7,254 ) $ (5,167 ) $ (30,780 ) $ (7,507 )Interest 3,299 3,262 3,414 6,561 6,635 expense, netIncome taxexpense 8,776 (a) (6,849 ) (b) 3,052 1,927 8,926 (benefit)Depreciationand 6,855 4,244 5,689 11,099 14,549 amortizationexpenseImpairment ofmulti-client ? ? ? ? 1,167 data libraryImpairment of ? ? ? ? 4,150 goodwillSeverance ? ? ? ? 3,102 expenseAmortizationof government ? ? (6,923 ) ? (6,923 )relieffundingLoss onrestructuring 4,696 ? ? 4,696 ? transactionsEBITDAexcluding 100 (6,597 ) 65 (6,497 ) 24,099 non-recurringitemsStockappreciationrights ? 7 85 7 (1,010 )(credit)expenseAdjusted $ 100 $ (6,590 ) $ 150 $ (6,490 ) $ 23,089 EBITDA

(a) Includes a full valuation allowance on our net deferred tax assetsof$7.7million resulting from the going concern conclusionfor the three months ended June30, 2021.(b)Includes reversal of valuation allowance on ourdeferred tax assets of$7.7million resulting from the going concernbeing removed for the three months ended March 31, 2021.

ION GEOPHYSICAL CORPORATION AND SUBSIDIARIESDescription of Special Items and Reconciliation of GAAP (As Reported) to Non-GAAP (As Adjusted) Measures(In thousands, except per share data) (Unaudited)

The financial results are reported in accordance with GAAP. However, management believes that certain non-GAAP performance measures may provide users of this financial information, additional meaningful comparisons between current results and results in prior operating periods. One such non-GAAP financial measure is adjusted income (loss) from operations or adjusted net income (loss), which excludes certain charges or amounts. This adjusted income (loss) amount is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for income (loss) from operations, net income (loss) or other income data prepared in accordance with GAAP. See the tables below for supplemental financial data and the corresponding reconciliation to GAAP financials for the three and six months ended June 30, 2021 and 2020and three months ended March 31, 2021:

Three Months Ended June 30, 2021 Three Months Ended March 31, 2021 Three Months Ended June 30, 2020 As Special As As Special As As Special As Reported Items Adjusted Reported Items Adjusted Reported Items AdjustedNet revenues $ 19,714 $ ? $ 19,714 $ 14,036 $ ? $ 14,036 $ 22,731 $ ? $ 22,731 Cost of sales 16,076 ? 16,076 13,177 ? 13,177 18,147 ? 18,147 Gross profit 3,638 ? 3,638 859 ? 859 4,584 ? 4,584 Operating 11,019 ? 11,019 11,093 (7 ) (c) 11,086 10,056 (85 ) (c) 9,971 expensesIncome (loss)from (7,381 ) ? (7,381 ) (10,234 ) 7 (10,227 ) (5,472 ) 85 (5,387 )operationsInterest (3,299 ) ? (3,299 ) (3,262 ) ? (3,262 ) (3,414 ) ? (3,414 )expense, netOther income (4,070 ) 4,696 (a) 626 (607 ) ? (607 ) 6,771 (6,923 ) (e) (152 )(expense), netIncome (loss)before income (14,750 ) 4,696 (10,054 ) (14,103 ) 7 (14,096 ) (2,115 ) (6,838 ) (8,953 )taxesIncome taxexpense 8,776 (7,743 ) (b) 1,033 (6,849 ) 7,743 (d) 894 3,052 ? 3,052 (benefit)Net income (23,526 ) 12,439 (11,087 ) (7,254 ) (7,736 ) (14,990 ) (5,167 ) (6,838 ) (12,005 )(loss)Net loss(income)attributable (60 ) ? (60 ) 91 ? 91 (52 ) ? (52 )tononcontrollinginterestsNet income(loss) $ (23,586 ) $ 12,439 $ (11,147 ) $ (7,163 ) $ (7,736 ) $ (14,899 ) $ (5,219 ) $ (6,838 ) $ (12,057 )attributableto IONNet income(loss) per share:Basic and $ (0.90 ) $ (0.43 ) $ (0.46 ) $ (0.95 ) $ (0.37 ) $ (0.85 )DilutedWeightedaverage numberof common sharesoutstanding:Basic and 26,198 26,198 15,718 15,718 14,241 14,241 Diluted

(a) Represents loss on restructuring transaction of $4.7 million for the threemonths ended June 30, 2021 resulting from the exchange ofOld Notes for New Notes.(b)Represents a full valuation allowance on net deferred tax assetsof$7.7million resulting from the going concern conclusionfor the three months ended June30, 2021.(c) Represents stock appreciation rights awards expense for the three months endedMarch 31, 2021 and June 30, 2020.(d) Represents thereversal of valuation allowance on net deferred tax assets of$7.7million resulting from the going concern being removedfor the three months ended March 31, 2021.(e) Represents theamortization of government relief funding of$6.9millionfor the three months ended June30, 2020.

For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020

As Special As As Special As Reported Items Adjusted Reported Items AdjustedNet revenues $ 33,750 $ ? $ 33,750 $ 79,145 $ ? $ 79,145 Cost of sales 29,253 ? 29,253 46,217 (1,167 ) (c) 45,050 Gross profit 4,497 ? 4,497 32,928 (1,167 ) 34,095 (loss)Operating 22,112 (7 ) (a) 22,105 32,074 (6,243 ) (d) 25,831 expensesIncome (loss)from (17,615 ) 7 (17,608 ) 854 7,410 8,264 operationsInterest (6,561 ) ? (6,561 ) (6,635 ) ? (6,635 )expense, netOther income (4,677 ) 4,696 (b) 19 7,200 (6,923 ) (e) 277 (expense), netIncome (loss)before income (28,853 ) 4,703 (24,150 ) 1,419 487 1,906 taxesIncome tax 1,927 ? 1,927 8,926 350 (c) 9,276 expenseNet income (30,780 ) 4,703 (26,077 ) (7,507 ) 137 (7,370 )(loss)Net lossattributableto 31 ? 31 25 ? 25 noncontrollinginterestsNet income(loss) $ (30,749 ) $ 4,703 $ (26,046 ) $ (7,482 ) $ 137 $ (7,345 )attributableto IONNet loss per share:Basic and $ (1.47 ) $ (1.24 ) $ (0.53 ) $ (0.52 )DilutedWeightedaverage numberof common sharesoutstanding:Basic and 20,967 20,967 14,236 14,236 Diluted

(a)Represents stock appreciation rights awards expensefor the six months ended June 30, 2021.(b) Represents loss on restructuring transactionof $4.7 million for the six months ended June 30, 2021 resulting from the exchange ofOld Notes for New Notes.(c)Represents the impairment of multi-client data library of $1.2 million and the related tax impact of $0.4 million for the six months ended March 31, 2020.(d)Represents impairment of goodwill of $4.2 million and severance expense of $3.1 million, partially offset by stock appreciation right awards credit of $1.0million for the sixmonths ended June 30, 2020.(e)Representstheamortization of government relief funding of$6.9millionfor the six months ended June30, 2020.