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Geospace Technologies Corporation Reports Third Quarter and Nine-month 2024 Earnings

Company Announces Leadership Transition Plan

Geospace Technologies Corporation (NASDAQ: GEOS) (the “Company”) today announced results for its third quarter ended June 30, 2024. For the three-months ended June 30, 2024, Geospace reported revenue of $25.9 million, compared to revenue of $32.7 million for the comparable year-ago quarter. Net loss for the three-months ended June 30, 2024 was $2.1 million, or ($0.16) per diluted share, compared to net income of $3.2 million, or $0.24 per diluted share, for the quarter ended June 30, 2023.

For the nine-months ended June 30, 2024, Geospace reported revenue of $100.2 million compared to revenue of $95.2 million for the comparable year-ago period. Net income for the nine-months ended June 30, 2024 was $6.3 million, or $0.47 per diluted share, compared to net income of $7.8 million, or $0.59 per diluted share, for the nine-months ended June 30, 2023.

Aligned with its succession plan, the Company’s Board of Directors elected Richard J. (“Rich”) Kelley, currently serving as Executive Vice President and Chief Operating Officer, to the role of President and Chief Executive Officer. The change will occur at the beginning of the Company’s 2025 fiscal year on October 1, 2024. In order to ensure a smooth executive leadership transition, the plan calls for current President and Chief Executive Officer Walter R. (“Rick”) Wheeler to remain with the Company as Principal Executive Officer for the purposes of fiscal year 2024 financial filings. Additionally, he will serve as Senior Strategic Advisor to the CEO through and until his retirement on December 31, 2024.

Management’s Comments

Walter R. (“Rick”) Wheeler, President and CEO of the Company said, “As we close the third quarter with three months of fiscal year 2024 remaining, we continue to maintain a profitable year, reporting positive net income of $6.3 million, or $0.47 per share. In addition, our longstanding and unwavering commitment toward sustaining a strong balance sheet with no debt remains firmly intact, with holdings of $42.5 million in cash and short-term investments as of June 30, 2024. Nonetheless, third quarter revenue from our Oil & Gas Markets segment was negatively impacted by further gaps in our OBX rental contracts, leading to a net loss of $2.1 million for the three months ended June 30, 2024. The extended gaps are the result of unexpected weather delays, customer operational difficulties, and unawarded client surveys during the period, although some of the work is expected to resume in the fourth quarter.

“In profound contrast, our Adjacent Markets segment put forth all-time record revenue for the third quarter generating $16.0 million. This represents an increase of $1.1 million over the previous quarterly record that was set a year ago. Growing industry acceptance of our water meter cables and connectors provides a strong enabler for additional revenue from these products. In addition, we anticipate this segment to see substantial revenue contributions from our Aquana smart water valve and IOT technology products as market traction and increased sales backlog continues to gather. Given the well-known and often extreme volatility experienced in our Oil and Gas segment, careful expansion of products and market diversity in our Adjacent Markets segment has been a longstanding part of our strategic vision for Geospace. The noteworthy continuation of record performances from this segment is strong evidence that the strategy is on track to provide long-term value to our shareholders.

“Our Emerging Markets segment generated $640,000 of revenue in the third quarter with the largest portion coming from the fulfillment of a DARPA contract that is now essentially complete. As an outcome of this project and other independent efforts, there are multiple government agency security projects and advanced energy and energy transition monitoring projects that offer future opportunities for this technology to be uniquely applied.

“In other news, our stock repurchase program, authorized by the Board of Directors in May 2024, is progressing well. As of August 7, 2024, the company has repurchased approximately 512,000 of its common shares on the open market. In addition, our Board of Directors has approved an extension of the program, allowing up to an additional $2.0 million of shares to be purchased. And finally, we are pleased to reveal some specifics of our management and leadership succession plan. I am confident in the skills and business acumen that Rich Kelley has exhibited in his time with Geospace and look forward to a smooth transition that will both preserve and progress shareholder value.”

Oil and Gas Markets Segment

Third quarter revenue from the Company’s Oil and Gas Markets segment totaled $9.2 million for the three months ended June 30, 2024. This compares to $17.7 million in revenue for the same period a year ago representing a decrease of 48%. Revenue for the nine-month period ended June 30, 2024, is $59.9 million, an increase of 6.6% over the equivalent prior year period. The decrease in revenue for the three-month period was due to lower utilization for the Company’s wireless seismic rental fleet which is attributed to weather related delays, competition, and product availability. The delays impacted a previously announced contract valued at a minimum of $3.6 million, which accounts for a portion of the differential between the comparable third quarter periods. This contract is expected to be underway at the end of the fiscal year’s fourth quarter. The increase in revenue for the nine-month period is primarily due to a $30 million sale of the Company’s Mariner™ shallow water ocean bottom nodes, in the first quarter of fiscal year 2024, partially offset by a decrease in the utilization for its marine OBX rental fleet.

Adjacent Markets Segment

Revenue from the Company’s Adjacent Markets segment totaled $16.0 million for the three-month period ended June 30, 2024. This compares to $14.9 million in revenue for the same period a year ago representing an increase of 7.5%. Revenue for the nine-month period ended June 30, 2024, is $38.0 million, a modest decrease of 1% over the equivalent prior year period. Increases in the Company’s water meter products and industrial sensor products, partially offset by a lower demand for both contract manufacturing services and thermal film products are attributed to the changes in revenue for both periods. As of June 30, 2024, Aquana has an order backlog valued at approximately $900,000, a first for the Aquana subsidiary.

Emerging Markets Segment

The Company’s Emerging Markets segment generated revenue of $640,000 for the three-month period ended June 30, 2024. This compares to $109,000 in revenue for the same period a year ago representing an increase of 487%. Revenue for the nine-month period was $2.0 million compared to $393,000 from the same prior year period representing an increase of 406%. Revenue from both periods came from a $1.5 million government contract which has concluded. As of June 30, 2024, the business segment has a backlog of approximately $750,000 derived largely from an extension of the existing U.S. Border Patrol contract.

Balance Sheet and Liquidity

For the nine-month period ended June 30, 2024, the Company used $7.5 million in cash and cash equivalents from operating activities. The Company generated $3.9 million of cash from investing activities that included $30.9 million in proceeds from the sale of rental equipment and $15.3 million in net proceeds from the sale and purchase of short-term investments, $8.2 million for additions to the rental fleet and $3.6 million for additional property, plant and equipment investments.

As of June 30, 2024, the Company held $42.5 million in cash and short-term investments and maintained an additional borrowing availability of $15 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 the fourth quarter of fiscal year 2024, management anticipates capital expenditures of $5 million including $3.5 million earmarked for additions to its rental equipment.

Conference Call Information

The Company will host a conference call to review its third quarter fiscal year 2024 financial results on Friday, August 9, 2024, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). Participants can access the call at (800) 225-9448 (US) or (203) 518-9708 (International) and reference the conference ID: GEOSQ324 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 under the ticker symbol GEOS and has been added to the Russell 2000®, Russell 3000®, and Russell Micro-cap®. 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

 

Nine Months Ended

 

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

20,223

 

 

$

19,727

 

 

$

83,434

 

 

$

56,976

 

Rental

 

 

5,635

 

 

 

12,988

 

 

 

16,726

 

 

 

38,218

 

Total revenue

 

 

25,858

 

 

 

32,715

 

 

 

100,160

 

 

 

95,194

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

14,179

 

 

 

14,522

 

 

 

53,016

 

 

 

43,083

 

Rental

 

 

3,153

 

 

 

4,214

 

 

 

10,501

 

 

 

14,649

 

Total cost of revenue

 

 

17,332

 

 

 

18,736

 

 

 

63,517

 

 

 

57,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

8,526

 

 

 

13,979

 

 

 

36,643

 

 

 

37,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

6,941

 

 

 

6,655

 

 

 

19,313

 

 

 

19,477

 

Research and development

 

 

4,011

 

 

 

4,356

 

 

 

11,476

 

 

 

12,097

 

Provision for (recovery of) credit losses

 

 

(33

)

 

 

(178

)

 

 

(84

)

 

 

(41

)

Total operating expenses

 

 

10,919

 

 

 

10,833

 

 

 

30,705

 

 

 

31,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposal of property

 

 

 

 

 

 

 

 

 

 

 

1,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

(2,393

)

 

 

3,146

 

 

 

5,938

 

 

 

7,244

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(44

)

 

 

(22

)

 

 

(144

)

 

 

(100

)

Interest income

 

 

472

 

 

 

88

 

 

 

954

 

 

 

371

 

Foreign currency transaction gains (losses), net

 

 

(70

)

 

 

301

 

 

 

(253

)

 

 

593

 

Other, net

 

 

(37

)

 

 

(66

)

 

 

(104

)

 

 

(72

)

Total other income, net

 

 

321

 

 

 

301

 

 

 

453

 

 

 

792

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(2,072

)

 

 

3,447

 

 

 

6,391

 

 

 

8,036

 

Income tax expense (benefit)

 

 

(2

)

 

 

219

 

 

 

109

 

 

 

268

 

Net income (loss)

 

$

(2,070

)

 

$

3,228

 

 

$

6,282

 

 

$

7,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.16

)

 

$

0.25

 

 

$

0.47

 

 

$

0.59

 

Diluted

 

$

(0.16

)

 

$

0.24

 

 

$

0.47

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

13,216,386

 

 

 

13,171,654

 

 

 

13,270,444

 

 

 

13,131,795

 

Diluted

 

 

13,216,386

 

 

 

13,320,881

 

 

 

13,431,714

 

 

 

13,157,919

 

 
 
 
 

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands except share amounts)

(unaudited) 

 

 

 

June 30, 2024

 

September 30, 2023

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,327

 

 

$

18,803

 

Short-term investments

 

 

30,189

 

 

 

14,921

 

Trade accounts and note receivable, net

 

 

16,164

 

 

 

21,373

 

Inventories, net

 

 

24,557

 

 

 

18,430

 

Prepaid expenses and other current assets

 

 

2,771

 

 

 

2,251

 

Total current assets

 

 

86,008

 

 

 

75,778

 

 

 

 

 

 

 

 

Non-current inventories, net

 

 

17,362

 

 

 

24,888

 

Rental equipment, net

 

 

16,907

 

 

 

21,587

 

Property, plant and equipment, net

 

 

24,037

 

 

 

24,048

 

Non-current trade accounts receivable

 

 

1,510

 

 

 

 

Operating right-of-use assets

 

 

527

 

 

 

714

 

Goodwill

 

 

736

 

 

 

736

 

Other intangible assets, net

 

 

4,505

 

 

 

4,805

 

Other non-current assets

 

 

361

 

 

 

486

 

Total assets

 

$

151,953

 

 

$

153,042

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable trade

 

$

4,230

 

 

$

6,659

 

Operating lease liabilities

 

 

215

 

 

 

257

 

Other current liabilities

 

 

9,693

 

 

 

12,882

 

Total current liabilities

 

 

14,138

 

 

 

19,798

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

368

 

 

 

512

 

Deferred tax liabilities, net

 

 

26

 

 

 

16

 

Total liabilities

 

 

14,532

 

 

 

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; 14,204,082 and 14,030,481 shares issued, respectively; and 13,070,615 and 13,188,489 shares outstanding, respectively

 

 

142

 

 

 

140

 

Additional paid-in capital

 

 

97,067

 

 

 

96,040

 

Retained earnings

 

 

68,142

 

 

 

61,860

 

Accumulated other comprehensive loss

 

 

(17,431

)

 

 

(17,824

)

Treasury stock, at cost, 1,133,467 and 841,992 shares, respectively

 

 

(10,499

)

 

 

(7,500

)

Total stockholders’ equity

 

 

137,421

 

 

 

132,716

 

Total liabilities and stockholders’ equity

 

$

151,953

 

 

$

153,042

 

 
 
 
 

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited) 

 

 

 

Nine Months Ended

 

 

June 30, 2024

 

June 30, 2023

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

6,282

 

 

$

7,768

 

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

 

 

 

 

 

 

Deferred income tax expense

 

 

10

 

 

 

1

 

Rental equipment depreciation

 

 

8,534

 

 

 

9,204

 

Property, plant and equipment depreciation

 

 

2,595

 

 

 

2,785

 

Amortization of intangible assets

 

 

300

 

 

 

622

 

Accretion of discounts on short-term investments

 

 

(415

)

 

 

(50

)

Stock-based compensation expense

 

 

1,029

 

 

 

1,074

 

Recovery of credit losses

 

 

(84

)

 

 

(41

)

Inventory obsolescence expense

 

 

144

 

 

 

2,131

 

Gross profit from sale of rental equipment

 

 

(20,751

)

 

 

(4,318

)

Gain on disposal of property

 

 

 

 

 

(1,315

)

Loss (gain) on disposal of equipment

 

 

11

 

 

 

(432

)

Realized foreign currency translation loss from dissolution of foreign subsidiary

 

 

 

 

 

38

 

Effects of changes in operating assets and liabilities:

 

 

 

 

 

 

Trade accounts and note receivable

 

 

5,162

 

 

 

(10,561

)

Inventories

 

 

(5,787

)

 

 

(7,175

)

Other assets

 

 

(176

)

 

 

453

 

Accounts payable trade

 

 

(1,408

)

 

 

1,290

 

Other liabilities

 

 

(2,973

)

 

 

1,654

 

Net cash provided by (used in) operating activities

 

 

(7,527

)

 

 

3,128

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(3,577

)

 

 

(1,862

)

Proceeds from the sale of property, plant and equipment

 

 

2

 

 

 

4,406

 

Investment in rental equipment

 

 

(8,181

)

 

 

(6,213

)

Proceeds from the sale of rental equipment

 

 

30,948

 

 

 

11,095

 

Purchases of short-term investments

 

 

(24,033

)

 

 

 

Proceeds from the sale of short-term investments

 

 

8,750

 

 

 

900

 

Net cash provided by investing activities

 

 

3,909

 

 

 

8,326

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Purchase of treasury stock

 

 

(2,999

)

 

 

 

Payments on contingent consideration

 

 

 

 

 

(175

)

Net cash used in financing activities

 

 

(2,999

)

 

 

(175

)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

141

 

 

 

(124

)

Increase (decrease) in cash and cash equivalents

 

 

(6,476

)

 

 

11,155

 

Cash and cash equivalents, beginning of period

 

 

18,803

 

 

 

16,109

 

Cash and cash equivalents, end of period

 

$

12,327

 

 

$

27,264

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid for income taxes

 

$

185

 

 

$

111

 

Inventory transferred to rental equipment

 

 

5,765

 

 

 

117

 

   
   
   
   

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUMMARY OF SEGMENT REVENUE AND OPERATING INCOME (LOSS)

(in thousands)

(unaudited)

   

 

 

Three Months Ended

 

Nine Months Ended

 

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Oil and Gas Markets segment revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Traditional seismic exploration product revenue

 

$

2,005

 

 

$

3,363

 

 

$

7,316

 

 

$

9,509

 

Wireless seismic exploration product revenue

 

 

6,978

 

 

 

13,786

 

 

 

52,291

 

 

 

45,920

 

Reservoir product revenue

 

 

191

 

 

 

523

 

 

 

323

 

 

 

810

 

 

 

 

9,174

 

 

 

17,672

 

 

 

59,930

 

 

 

56,239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjacent Markets segment revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Industrial product revenue

 

 

13,025

 

 

 

11,678

 

 

 

28,492

 

 

 

29,250

 

Imaging product revenue

 

 

2,945

 

 

 

3,184

 

 

 

9,528

 

 

 

9,142

 

 

 

 

15,970

 

 

 

14,862

 

 

 

38,020

 

 

 

38,392

 

Emerging Markets segment revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Border and perimeter security product revenue

 

 

640

 

 

 

109

 

 

 

1,987

 

 

 

393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

74

 

 

 

72

 

 

 

223

 

 

 

170

 

Total revenue

 

$

25,858

 

 

$

32,715

 

 

$

100,160

 

 

$

95,194

 
 
 

 

 

Three Months Ended

 

Nine Months Ended

 

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Operating income (loss):

 

 

 

 

 

 

 

 

Oil and Gas Markets segment

 

$

(2,302

)

 

$

3,238

 

 

$

9,126

 

 

$

9,820

 

Adjacent Markets segment

 

 

4,661

 

 

 

4,346

 

 

 

9,491

 

 

 

9,148

 

Emerging Markets segment

 

 

(1,148

)

 

 

(1,047

)

 

 

(2,424

)

 

 

(3,267

)

Corporate

 

 

(3,604

)

 

 

(3,391

)

 

 

(10,255

)

 

 

(8,457

)

Total operating income (loss)

 

$

(2,393

)

 

$

3,146

 

 

$

5,938

 

 

$

7,244

 

 

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