Geospace Technologies Corporation (NASDAQ: GEOS) (the “Company”)
today announced results for its second quarter ended March 31,
2023. For the three-months ended March 31, 2023, Geospace reported
revenue of $31.4 million compared to revenue of $24.7 million for
the comparable year-ago quarter. Net income for the three-months
ended March 31, 2023 was $4.7 million, or $0.35 per diluted share,
compared to a net loss of $1.5 million, or ($0.11) per diluted
share, for the quarter ended March 31, 2022.
For the six-months ended March 31, 2023, Geospace reported
revenue of $62.5 million compared to revenue of $42.7 million for
the comparable year-ago period. Net income for the six-months ended
March 31, 2023 was $4.5 million, or $0.35 per diluted share,
compared to a net loss of $8.2 million, or ($0.64) per diluted
share, for the six-months ended March 31, 2022.
Management’s Comments
Walter R. (“Rick”) Wheeler, President and CEO of the Company
said, “We’re delighted with the solid performance reflected in our
second quarter results for fiscal year 2023. Revenue of $31.4
million represents the highest quarterly figure in almost 9 years,
and the achievement of net income exceeding $4.6 million
demonstrates our real commitment to profitability. Although net
income includes a $1.3 million gain on the sale of our Langfield
facility, most of the income came from profits on operations. The
largest single contribution to both revenue and profits for the
second quarter and first half of the fiscal year came from rentals
of our OBX ocean bottom nodes. Our OBX customers report that
projects requiring their ocean bottom seismic services have
increased beyond pre-pandemic levels and will remain strong
throughout the year. This translates to greater demand and
utilization of our OBX rental fleet. We believe these improved
market conditions are durable for the foreseeable future and should
provide leverage for greater revenue and less volatility from our
Oil & Gas segment.
Driven by sales of our water meter cables and connectors, second
quarter revenue from our Adjacent Markets segment set yet another
quarterly record. Moreover, revenue generated by this segment in
the first half of fiscal year 2023 represents the greatest figure
ever achieved in any six-month period. It is rewarding to see such
firm evidence of the positive impact our strategic diversification
efforts are making in this segment, and how its growing strength
adds stability to the company’s overall performance. We believe
this segment will continue to provide growing and reliable revenue
as domestic municipalities update their smart water meter
infrastructure. We further anticipate these infrastructure updates
to translate into meaningful contracts for our Aquana smart water
shut off valves.
Only a small amount of revenue was generated in the second
quarter and first half of the fiscal year by Quantum and our
Emerging Markets segment. However, current efforts on the
previously announced DARPA contract, as well as a smaller contract
with an undisclosed major defense contractor, offer potential for
significant future contracts utilizing our SADAR acoustic arrays
and unique analytics. Ongoing discussions with energy companies and
service providers related to carbon capture monitoring also hold
promise for the future of this segment. Our efforts to reduce
expenses are also bearing fruit. Looking past last year’s non-cash
adjustments to earn-out liabilities, operating expenses for the
first half of the fiscal year have decreased 5% compared to last
year. We believe the company’s path to profitability through
conservative management, a strong balance sheet, and market
cultivation will continue to yield positive results.
Oil and Gas Markets Segment
Revenue from the Oil and Gas Markets segment totaled $18.4
million for the three-month ended March 31, 2023. Revenue from the
same period of the prior fiscal year was $15.1 million, an increase
of 21.6%. Revenue for the six-month period ended March 31, 2023, is
$38.6 million, an increase of 55.6% over the equivalent prior year
period. The increase in revenue for both periods was due to higher
rental revenue from higher utilization for our marine OBX rental
fleet and higher demand for our seismic sensors. The increase in
revenue for the six-month period is partially offset by a decrease
in the demand for our wireless exploration products. Strong demand
for the Company’s OBX rental fleet has increased utilization to
near full capacity. Rental revenue reached pre-pandemic levels and
the highest quarter since June 2020.
Adjacent Markets Segment
Revenue from our Adjacent Markets products for the three months
ended March 31, 2023, is $12.7 million an increase of $3.5 million,
and an increase of $38.1% from the corresponding period of the
prior fiscal year. The revenue for the six-month period ended March
31, 2023, was $23.5 million, an increase of 35.4%, from the same
period of the prior fiscal year. The increase in revenue for both
periods was primarily due to increased demand for our water meter
cable and connector products.
Emerging Markets
For the three-and six-month periods ended March 31, 2023, the
Company’s Emerging Market’s segment generated revenue of $0.2
million and $0.3 million respectively. For the similar periods from
fiscal year 2022, the Emerging Market’s segment produced revenue of
$0.3 million and $0.4 million, respectively. The revenue from this
segment primarily consisted of on-going service and maintenance
related to our completed contract with the U.S. Customs and Border
Protection. Currently, the Emerging Markets segment has a backlog
of $2.1 million, of which the Company expects to begin recognizing
a portion of this revenue in the third quarter of fiscal year
2023.
Balance Sheet and Liquidity
For the six-month period ended March 31, 2023, the Company used
$5.1 million in cash and cash equivalents from operating
activities. The Company generated $12.2 million of cash from
investing activities that included $8.8 million in proceeds from
the sale of rental equipment and $4.2 million in proceeds from the
sale of a property and equipment offset by cash used to invest in
additional property, plant, rental and other equipment of $1.8
million. As of March 31, 2023, the Company had $22.8 million in
cash, cash equivalents and short-term investments, and maintained
an additional borrowing availability of $5.5 million under its
credit agreement with no borrowings outstanding. Thus, as of March
31, 2023, the Company’s total liquidity stood at $28.3 million. The
Company is currently in discussions with one of its lenders on a
new larger credit facility. The Company additionally owns
unencumbered property and real estate in both domestic and
international locations.
Conference Call Information
The Company will host a conference call to review its second
quarter fiscal year 2023 financial results on May 11, 2023, 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) 518-9848
(International). Please reference the conference ID: GEOSQ223 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, expected demand for our products in
various segments, and ability to secure a new credit facility.
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, , inability to secure a
new credit facility, 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
Six Months Ended
March 31, 2023
March 31, 2022
March 31, 2023
March 31, 2022
Revenue:
Products
$
17,701
$
21,565
$
37,249
$
34,597
Rental
13,669
3,135
25,230
8,094
Total revenue
31,370
24,700
62,479
42,691
Cost of revenue:
Products
13,196
13,500
28,561
24,850
Rental
5,225
4,390
10,435
9,329
Total cost of revenue
18,421
17,890
38,996
34,179
Gross profit
12,949
6,810
23,483
8,512
Operating expenses:
Selling, general and administrative
6,387
5,991
12,822
11,735
Research and development
3,483
4,673
7,741
9,942
Change in estimated fair value of
contingent consideration
—
(2,218
)
—
(4,658
)
Bad debt expense
17
13
137
28
Total operating expenses
9,887
8,459
20,700
17,047
Gain on disposal of property
1,315
—
1,315
—
Income (loss) from operations
4,377
(1,649
)
4,098
(8,535
)
Other income (expense):
Interest expense
(39
)
—
(78
)
—
Interest income
127
126
283
320
Foreign exchange gains, net
185
93
292
111
Other, net
6
(19
)
(6
)
(36
)
Total other income, net
279
200
491
395
Income (loss) before income taxes
4,656
(1,449
)
4,589
(8,140
)
Income tax expense
19
25
49
102
Net income (loss)
$
4,637
$
(1,474
)
$
4,540
$
(8,242
)
Income (loss) per common share:
Basic
$
0.35
$
(0.11
)
$
0.35
$
(0.64
)
Diluted
$
0.35
$
(0.11
)
$
0.35
$
(0.64
)
Weighted average common shares
outstanding:
Basic
13,156,715
12,999,022
13,111,866
12,958,911
Diluted
13,156,715
12,999,022
13,111,866
12,958,911
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands except share
amounts)
(unaudited)
March 31, 2023
September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
22,805
$
16,109
Short-term investments
—
894
Trade accounts and notes receivable,
net
25,908
20,886
Inventories, net
20,477
19,995
Prepaid expenses and other current
assets
1,404
2,077
Total current assets
70,594
59,961
Non-current inventories, net
17,508
12,526
Rental equipment, net
20,579
28,199
Property, plant and equipment, net
22,690
26,598
Operating right-of-use assets
836
957
Goodwill
736
736
Other intangible assets, net
5,143
5,573
Other non-current assets
356
506
Total assets
$
138,442
$
135,056
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable trade
$
5,021
$
5,595
Contingent consideration
—
175
Operating lease liabilities
248
241
Other current liabilities
6,967
6,616
Total current liabilities
12,236
12,627
Non-current operating lease
liabilities
654
769
Deferred tax liabilities, net
15
13
Total liabilities
12,905
13,409
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; 14,013,481 and 13,863,233 shares issued,
respectively; and 13,171,489 and 13,021,241 shares outstanding,
respectively
140
139
Additional paid-in capital
95,343
94,667
Retained earnings
54,194
49,654
Accumulated other comprehensive loss
(16,640
)
(15,313
)
Treasury stock, at cost, 841,992
shares
(7,500
)
(7,500
)
Total stockholders’ equity
125,537
121,647
Total liabilities and stockholders’
equity
$
138,442
$
135,056
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
March 31, 2023
March 31, 2022
Cash flows from operating activities:
Net income (loss)
$
4,540
$
(8,242
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Deferred income tax expense (benefit)
—
(7
)
Rental equipment depreciation
6,442
7,205
Property, plant and equipment
depreciation
1,896
2,071
Amortization of intangible assets
430
893
Accretion of discounts on short-term
investments
1
76
Stock-based compensation expense
676
954
Bad debt expense
137
28
Inventory obsolescence expense
1,836
1,106
Change in estimated fair value of
contingent consideration
—
(4,658
)
Gross profit from sale of used rental
equipment
(3,925
)
(10,741
)
Gain on disposal of property
(1,315
)
—
Gain on disposal of equipment
(464
)
—
Realized loss on short-term
investments
—
18
Effects of changes in operating assets and
liabilities:
Trade accounts and notes receivable
(8,352
)
4,666
Unbilled receivables
—
1,051
Inventories
(7,882
)
(1,313
)
Other assets
1,702
1,027
Accounts payable trade
(574
)
(1,746
)
Other liabilities
(226
)
(2,720
)
Net cash used in operating activities
(5,078
)
(10,332
)
Cash flows from investing activities:
Purchase of property, plant and
equipment
(1,126
)
(509
)
Proceeds from the sale of equipment
539
—
Proceeds from the sale of property
3,682
—
Investment in rental equipment
(635
)
(2,368
)
Proceeds from the sale of used rental
equipment
8,794
3,000
Purchases of short-term investments
—
(450
)
Proceeds from the sale of short-term
investments
900
6,174
Net cash provided by investing
activities
12,154
5,847
Cash flows from financing activities:
Payments on contingent consideration
(175
)
(807
)
Purchase of treasury stock
-
(695
)
Net cash used in financing activities
(175
)
(1,502
)
Effect of exchange rate changes on
cash
(205
)
132
Increase (decrease) in cash and cash
equivalents
6,696
(5,855
)
Cash and cash equivalents, beginning of
fiscal year
16,109
14,066
Cash and cash equivalents, end of fiscal
period
$
22,805
$
8,211
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash paid for income taxes
$
26
$
81
Issuance of note receivable related to
sale of used rental equipment
—
11,745
Inventory transferred to rental
equipment
82
814
Inventory transferred to property, plant
and equipment
—
172
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
SUMMARY OF SEGMENT REVENUE AND
OPERATING INCOME (LOSS)
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
March 31, 2023
March 31, 2022
March 31, 2023
March 31, 2022
Oil and Gas Markets
Traditional seismic exploration product
revenue
$
3,391
$
1,245
$
6,146
$
1,836
Wireless seismic exploration product
revenue
14,896
13,507
32,134
22,234
Reservoir product revenue
132
394
287
730
18,419
15,146
38,567
24,800
Adjacent Markets segment revenue:
Industrial product revenue
9,642
5,993
17,572
11,006
Imaging product revenue
3,066
3,210
5,958
6,368
12,708
9,203
23,530
17,374
Emerging Markets segment revenue:
Border and perimeter security product
revenue
191
299
284
436
Corporate
52
52
98
81
Total revenue
$
31,370
$
24,700
$
62,479
$
42,691
Three Months Ended
Six Months Ended
March 31, 2023
March 31, 2022
March 31, 2023
March 31, 2022
Operating income (loss):
Oil and Gas Markets segment
$
4,176
$
1,656
$
6,582
$
(2,514
)
Adjacent Markets segment
3,055
1,292
4,802
2,500
Emerging Markets segment
(1,007
)
(1,384
)
(2,220
)
(2,204
)
Corporate
(1,847
)
(3,213
)
(5,066
)
(6,317
)
Total operating income (loss)
$
4,377
$
(1,649
)
$
4,098
$
(8,535
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230511005908/en/
Media Contact: Caroline Kempf, ckempf@geospace.com,
321.341.9305
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