GEOS Geospace Technologies Corporation

Quarterly Earnings Strengthen by Significant Demand for Newly Released Mariner™ Seismic Data Acquisition Product

Geospace Technologies Corporation (NASDAQ: GEOS) (the “Company”) today announced results for its first quarter ended December 31, 2023. For the three-months ended December 31, 2023, Geospace reported revenue of $50.0 million, a 60% increase compared to revenue of $31.1 million for the comparable year-ago quarter. Net income for the three-months ended December 31, 2023 was $12.7 million, or $0.94 per diluted share, compared to a net loss of $0.1 million, or ($0.01) per diluted share, for the quarter ended December 31, 2022.

Management’s Comments

Walter R. (“Rick”) Wheeler, President and CEO of the Company said, “We’re gratified to see the first quarter of fiscal year 2024 mark our fourth straight quarter of profitability. In conjunction with an improved industry demand for products in our Oil and Gas Markets segment, our financial discipline and streamlining of operations over the last year have helped carry profitability into the new fiscal year. Recorded revenue of $50 million represents the highest quarterly figure achieved in nearly ten years, and net income exceeding $12.7 million solidly demonstrates the sort of value we strive to deliver to our shareholders. Demand for our newest technology ocean bottom node, known as the Mariner™, was paramount in delivering our first quarter performance. As previously announced, a $20 million rental contract for a Mariner system was converted to a $30 million sale in late December. This brought a significant amount of revenue forward in the first quarter that would have otherwise been received from the rental contract over the course of the year. Although we don’t anticipate another such sale imminently, this transaction serves as a stark reminder of how commerce in our Oil and Gas Markets segment can be very lumpy from quarter to quarter.

Navigating these ups and downs is familiar territory for Geospace, and we are encouraged by industry reports of major energy companies beginning to invest more broadly in conventional seismic exploration and 4D time-lapse monitoring projects. Each of these benefit from our latest technology offerings such as our Mariner and Aquanaut ocean bottom nodes. This leads us to anticipate healthy utilization of our ocean bottom node fleet during the second half of the fiscal year.

Our Adjacent Markets segment experienced a modest decrease in first quarter revenue compared to last year. We believe the reduction reflects customers working through larger purchases made in earlier quarters to stay ahead of supply chain concerns. Despite the slight reduction in revenue, we expect this segment to see continued overall growth and remain strong into the foreseeable future. We believe our strategy for this segment to deliver stable, predictable, and profitable revenue to our bottom line is working. Moreover, our confidence in this segment’s continued improvement increases as the demand for smart infrastructure solutions expands, both domestically and abroad. This is further evidenced by the recent signing of a modest contract for our Aquana smart water valves which should begin contributing to revenue in the next quarter.

Our Emerging Markets segment generated a small amount of revenue in the first quarter through existing contracts between our Quantum subsidiary and the US Federal government. The opportunity for additional contracts with the Customs and Border Protection agency is solid, but those government decisions are not expected until later in the calendar year. Progress toward significant revenue contributions from this segment have developed more slowly than desired. However, quoting activities from energy companies for carbon capture monitoring projects as well as other new and unique applications for Quantum’s analytical methods have increased. Despite the high public interest in carbon capture, utilization, and storage, these projects appear to move slowly as country requirements and industry commitments evolve.”

Oil and Gas Markets Segment

First quarter revenue from the Company’s Oil and Gas Markets segment totaled $39.9 million for the three months ended December 31, 2023. This compares to $20.1 million in revenue for the same period a year ago, an increase of 98%. Revenue of the magnitude achieved in the three months ended December 31, 2023, is not expected to reoccur in the foreseeable future.

Wireless Seismic Exploration Products revenue totaled $38.1 million for the quarterly period, a $20.8 million increase in revenue over the prior year period. The increase in revenue is largely due to the $30 million purchase of the Company’s Mariner™, a shallow water ocean bottom node. The increase in revenue is partially offset by a decrease in the utilization of our OBX rental fleet as compared to the same prior year period.

Adjacent Markets Segment

Revenue from the Company’s Adjacent Markets segment totaled $9.8 million for the three-month period ended December 31, 2023. This compares with $10.8 million from the equivalent year ago period, representing a decrease of 9%. The decrease in revenue is the result of lower demand for the Company’s smart water meter cable and connector products.

Emerging Markets Segment

The Company’s Emerging Markets segment generated revenue of $0.2 million for the three-month period ended December 31, 2023. This compares with $0.1 million from the equivalent year ago period. The Emerging Market segment has a backlog of approximately $1.8 million that will be recognized during fiscal year 2024.

Balance Sheet and Liquidity

For the three-month period ended December 31, 2023, the Company generated $2.7 million in cash and cash equivalents from operating activities. The Company used $2.7 million of cash from investing activities that included $2.6 million invested in rental equipment and $0.8 million invested in property, plant and equipment, partially offset by $.6 million in proceeds from the sale of rental equipment. As of December 31, 2023, the Company had $34.0 million in cash, cash equivalents and short-term investments, and maintained an additional borrowing availability of $14.9 million under its bank credit agreement with no borrowings outstanding. The Company additionally owns unencumbered property and real estate in both domestic and international locations. In fiscal year 2024, management anticipates a capital expenditure budget of $7.0 million including $5.0 million earmarked for additions to its rental equipment.

Conference Call Information

The Company will host a conference call to review its first quarter fiscal year 2024 financial results on February 8, 2024, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). Participants can access the call at (800) 267-6316 (US) or (203) 518-9814 (International). Please reference the conference ID: GEOSQ124 prior to the start of the conference call. A replay will be available for approximately 60 days and may be accessed through the Investor Relations tab of the Company’s website at www.geospace.com.

About Geospace Technologies

Geospace Technologies is a global technology and instrumentation manufacturer specializing in vibration sensing and highly ruggedized products which serve energy, industrial, government and commercial customers worldwide. The Company’s products blend engineering expertise with advanced analytic software to optimize energy exploration, enhance national and homeland security, empower water utility and property managers, and streamline electronic printing solutions. With more than four decades of excellence, the Company’s more than 600 employees across the world are dedicated to engineering and technical quality. Geospace is traded on the U.S. NASDAQ stock exchange as GEOS. For more information, visit www.geospace.com.

Forward Looking Statements

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “could”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or similar words. Statements that contain these words should be read carefully because they discuss future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information. Examples of forward- looking statements include, statements regarding our expected operating results and expected demand for our products in various segments. These forward-looking statements reflect our current judgment about future events and trends based on currently available information. However, there will likely be events in the future that we are not able to predict or control. The factors listed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K which is on file with the Securities and Exchange Commission, as well as other cautionary language in such Annual Report, any subsequent Quarterly Report on Form 10- Q, or in our other periodic reports, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Such examples include, but are not limited to, the failure of the Quantum or OptoSeis® or Aquana technology transactions to yield positive operating results, decreases in commodity price levels, the continued adverse impact of COVID-19, which could reduce demand for our products, the failure of our products to achieve market acceptance (despite substantial investment by us), our sensitivity to short term backlog, delayed or cancelled customer orders, product obsolescence resulting from poor industry conditions or new technologies, bad debt write-offs associated with customer accounts, inability to collect on promissory notes, lack of further orders for our OBX systems, failure of our Quantum products to be adopted by the border and security perimeter market or a decrease in such market due to governmental changes, and infringement or failure to protect intellectual property. The occurrence of the events described in these risk factors and elsewhere in our most recent Annual Report on Form 10-K or in our other periodic reports could have a material adverse effect on our business, results of operations and financial position, and actual events and results of operations may vary materially from our current expectations. We assume no obligation to revise or update any forward- looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable securities laws and regulations.

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

December 31, 2023

 

December 31, 2022

Revenue:

 

 

 

 

 

 

Products

 

$

43,714

 

 

$

19,548

 

Rental

 

 

6,318

 

 

 

11,561

 

Total revenue

 

 

50,032

 

 

 

31,109

 

Cost of revenue:

 

 

 

 

 

 

Products

 

 

23,842

 

 

 

15,365

 

Rental

 

 

3,954

 

 

 

5,210

 

Total cost of revenue

 

 

27,796

 

 

 

20,575

 

 

 

 

 

 

 

 

Gross profit

 

 

22,236

 

 

 

10,534

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Selling, general and administrative

 

 

5,826

 

 

 

6,435

 

Research and development

 

 

3,602

 

 

 

4,258

 

Provision for credit losses

 

 

(29

)

 

 

120

 

Total operating expenses

 

 

9,399

 

 

 

10,813

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

12,837

 

 

 

(279

)

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

Interest expense

 

 

(56

)

 

 

(39

)

Interest income

 

 

235

 

 

 

156

 

Foreign currency transaction gains (losses), net

 

 

(163

)

 

 

107

 

Other, net

 

 

(74

)

 

 

(12

)

Total other income (expense), net

 

 

(58

)

 

 

212

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

12,779

 

 

 

(67

)

Income tax expense

 

 

100

 

 

 

30

 

Net income (loss)

 

$

12,679

 

 

$

(97

)

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

Basic

 

$

0.96

 

 

$

(0.01

)

Diluted

 

$

0.94

 

 

$

(0.01

)

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

13,251,360

 

 

 

13,067,991

 

Diluted

 

 

13,460,516

 

 

 

13,067,991

 

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands except share amounts)

(unaudited)

 

 

 

December 31, 2023

 

September 30, 2023

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,907

 

 

$

18,803

 

Short-term investments

 

 

15,051

 

 

 

14,921

 

Trade accounts and note receivable, net

 

 

41,969

 

 

 

21,373

 

Inventories, net

 

 

21,839

 

 

 

18,430

 

Prepaid expenses and other current assets

 

 

2,227

 

 

 

2,251

 

Total current assets

 

 

99,993

 

 

 

75,778

 

 

 

 

 

 

 

 

Non-current inventories, net

 

 

24,888

 

 

 

24,888

 

Rental equipment, net

 

 

15,242

 

 

 

21,587

 

Property, plant and equipment, net

 

 

24,083

 

 

 

24,048

 

Non-current trade accounts receivable

 

 

1,510

 

 

 

—

 

Operating right-of-use assets

 

 

653

 

 

 

714

 

Goodwill

 

 

736

 

 

 

736

 

Other intangible assets, net

 

 

4,696

 

 

 

4,805

 

Other non-current assets

 

 

438

 

 

 

486

 

Total assets

 

$

167,383

 

 

$

153,042

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable trade

 

$

6,190

 

 

$

6,659

 

Operating lease liabilities

 

 

261

 

 

 

257

 

Other current liabilities

 

 

14,161

 

 

 

12,882

 

Total current liabilities

 

 

20,612

 

 

 

19,798

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

439

 

 

 

512

 

Deferred tax liabilities, net

 

 

25

 

 

 

16

 

Total liabilities

 

 

21,076

 

 

 

20,326

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, 1,000,000 shares authorized, no shares issued and outstanding

 

 

—

 

 

 

—

 

Common Stock, $.01 par value, 20,000,000 shares authorized; 14,159,082 and 14,030,481 shares issued, respectively; and 13,317,090 and 13,188,489 shares outstanding, respectively

 

 

142

 

 

 

140

 

Additional paid-in capital

 

 

96,444

 

 

 

96,040

 

Retained earnings

 

 

74,539

 

 

 

61,860

 

Accumulated other comprehensive loss

 

 

(17,318

)

 

 

(17,824

)

Treasury stock, at cost, 841,992 shares

 

 

(7,500

)

 

 

(7,500

)

Total stockholders’ equity

 

 

146,307

 

 

 

132,716

 

Total liabilities and stockholders’ equity

 

$

167,383

 

 

$

153,042

 

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

December 31, 2023

 

December 31, 2022

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

12,679

 

 

$

(97

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Deferred income tax expense (benefit)

 

 

8

 

 

 

(6

)

Rental equipment depreciation

 

 

3,313

 

 

 

3,247

 

Property, plant and equipment depreciation

 

 

822

 

 

 

1,017

 

Amortization of intangible assets

 

 

109

 

 

 

238

 

Amortization of premiums (accretion of discounts) on short-term investments

 

 

(115

)

 

 

5

 

Stock-based compensation expense

 

 

406

 

 

 

370

 

Provision for credit losses

 

 

(29

)

 

 

120

 

Inventory obsolescence expense

 

 

20

 

 

 

1,380

 

Gross profit from sale of rental equipment

 

 

(19,350

)

 

 

(3,092

)

Gain on disposal of property, plant and equipment

 

 

—

 

 

 

(47

)

Effects of changes in operating assets and liabilities:

 

 

 

 

 

 

Trade accounts and note receivable

 

 

8,001

 

 

 

(6,846

)

Inventories

 

 

(4,059

)

 

 

(5,188

)

Other assets

 

 

179

 

 

 

886

 

Accounts payable trade

 

 

(478

)

 

 

1,924

 

Other liabilities

 

 

1,146

 

 

 

1,225

 

Net cash provided by (used in) operating activities

 

 

2,652

 

 

 

(4,864

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(779

)

 

 

(265

)

Proceeds from the sale of property, plant and equipment

 

 

—

 

 

 

47

 

Investment in rental equipment

 

 

(2,558

)

 

 

(162

)

Proceeds from the sale of rental equipment

 

 

597

 

 

 

622

 

Net cash provided by (used in) investing activities

 

 

(2,740

)

 

 

242

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Payments on contingent consideration

 

 

—

 

 

 

(175

)

Net cash used in financing activities

 

 

—

 

 

 

(175

)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

192

 

 

 

43

 

Increase (decrease) in cash and cash equivalents

 

 

104

 

 

 

(4,754

)

Cash and cash equivalents, beginning of fiscal year

 

 

18,803

 

 

 

16,109

 

Cash and cash equivalents, end of fiscal period

 

$

18,907

 

 

$

11,355

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

Accounts receivable related to the sale of rental equipment

 

$

30,048

 

 

$

4,505

 

Inventory transferred to rental equipment

 

 

593

 

 

 

7

 

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUMMARY OF SEGMENT REVENUE AND OPERATING INCOME (LOSS)

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

December 31, 2023

 

December 31, 2022

Oil and Gas Markets segment revenue:

 

 

 

 

Traditional seismic exploration product revenue

 

$

1,763

 

$

2,755

Wireless seismic exploration product revenue

 

 

38,073

 

 

17,238

Reservoir product revenue

 

 

73

 

 

155

 

 

 

39,909

 

 

20,148

 

 

 

 

 

Adjacent Markets segment revenue:

 

 

 

 

Industrial product revenue

 

 

6,443

 

 

7,930

Imaging product revenue

 

 

3,372

 

 

2,892

 

 

 

9,815

 

 

10,822

Emerging Markets segment revenue:

 

 

 

Border and perimeter security product revenue

 

 

234

 

 

93

 

 

 

 

 

Corporate

 

 

74

 

 

46

Total revenue

 

$

50,032

 

$

31,109

 

 

Three Months Ended

 

 

December 31, 2023

 

December 31, 2022

Operating income (loss):

 

 

 

 

Oil and Gas Markets segment

 

$

14,563

 

 

$

2,406

 

Adjacent Markets segment

 

 

2,034

 

 

 

1,747

 

Emerging Markets segment

 

 

(625

)

 

 

(1,213

)

Corporate

 

 

(3,135

)

 

 

(3,219

)

Total operating income (loss)

 

$

12,837

 

 

$

(279

)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240207453001/en/

Caroline Kempf, ckempf@geospace.com, 321.341.9305