Geospace Technologies (NASDAQ: GEOS) today announced a net loss
of $7.2 million, or $(0.53) per diluted share, on revenue of $23.9
million for its second quarter ended March 31, 2021. This compares
with a net loss of $3.8 million, or ($0.28) per diluted share, on
revenue of $25.9 million for the second quarter of the prior year
period.
For the six months ended March 31, 2021, the Company recorded
revenue of $52.4 million compared to revenue of $43.6 million
during the prior year period. The Company reported a net loss of
$8.2 million, or $(0.61) per diluted share compared to a net loss
of $13.1 million, or $(0.97) per diluted share for the prior year
period.
Walter R. (“Rick”) Wheeler, President and CEO of Geospace
Technologies (the “Company”) said, “As the COVID-19 plague has
worsened in some locations while improving in others, our business
segments reflected similar divergence in the second fiscal quarter.
Yet, despite the challenges thrust upon us by the pandemic, signs
of recovery are mounting for the overall economy as well as the
businesses we serve. In many places, COVID-19 restrictions are
being lifted, air travel is ramping up, and businesses are
reopening and returning to work. Nonetheless, the impact of the
pandemic has been severe as evidenced in the three- and six-month
periods ended March 31, 2021. In our Oil and Gas Markets segment,
gaps in demand for our OBX marine nodal systems continued through
the second quarter. This led to lower rental revenue in the first
six months of the fiscal year compared to last year. Moreover, as
earlier OBX rental contracts ran to conclusion, many contracts
planned for potential follow-on work and new surveys around the
globe could not be started due to COVID-19 lockdowns and travel
restrictions. On a positive note, as COVID-19 vaccines are broadly
distributed and recovery from the pandemic gains momentum, we
believe much of this work will resume. Requests for quotes for
future rentals of OBX systems are increasing and some new contracts
are already underway or about to begin. On another positive note,
the reduction in rental revenue from our Oil and Gas Markets
segment is largely offset by the recognition of revenue from the
sale of a large GCL land recording system that was delivered a year
ago. Since that time, monthly payments under the promissory note
along with the initial down payment received toward the purchase
have been accumulating on our balance sheet as deferred revenue.
However, our ongoing due diligence review of the customer,
including recently received audited financial information, has
determined that completion of all remaining payments is probable
and that revenue from the sale should be recognized.”
Wheeler continued, “In contrast to the Oil and Gas Markets
segment and despite the negative effects of COVID-19, our Adjacent
Markets segment experienced second quarter revenue growth of 7%
compared to the same three-month period one year ago, with growth
expanding to almost 10% over last year’s first six months. This
improvement is primarily attributed to even larger growth in our
industrial products and services, which includes our smart water
meter cables and connectors and our contract manufacturing.
However, a portion of this growth was partially offset by
reductions in revenue from our graphic imaging products, where many
of our customers continue to be negatively impacted by COVID-19. As
the pandemic begins to abate, we believe that demand for these
products will increase as promotions and merchandising for schools,
sporting events, and other social gatherings resume.”
“The vast majority of revenue in our Emerging Markets segment
was recorded in our first fiscal quarter, and is thus reflected in
the six-month period ended March 31, 2021 with very little addition
in the second quarter. This revenue is in association with the
contract awarded by the Department of Homeland Security to our
Quantum subsidiary in April 2020. The contract called for providing
the Customs and Border Protection (“CBP”), U.S. Border Patrol with
a novel border and perimeter security solution comprising our
unique technological advances in sensors, systems, and data
analytics. We are very pleased that the deployment and installation
of this advanced border and perimeter security solution proceeded
on course. This continued expansion and diversification of products
and services in our Adjacent and Emerging Markets segments
demonstrates that Geospace is first and foremost an innovative
technology company. Our focused strategy is to push highly
engineered-for-purpose products into the hands of customers from
other markets as well as in our Oil and Gas Market, and we see even
more of this occurring in our future.”
Oil and Gas Markets Segment
The Company’s Oil and Gas Markets segment generated $16.1
million for the three months ended March 31, 2021. For the
six-month period ended March 31, 2021, revenue from this segment
totaled $28.9 million. These amounts compare with $18.4 million and
$29.9 million for the equivalent three- and six-month periods a
year ago, reflecting respective decreases of 17.9% and 3.5%. The
decreases for both periods are the result of lower demand for the
Company’s traditional seismic exploration products and reduced
rentals of the Company’s wireless OBX nodal marine systems. In both
periods, the decreases are partially offset by the recognition of
revenue from the sale of a $12.5 million land-based wireless
recording system, delivered to a customer one year ago. The
customer has met all payment obligations in connection with the
sale, and audited information recently received leads to the
determination that the collection of all remaining promissory note
payments is probable. The comparative decrease in revenue for the
six-months ended March 31, 2021, was also partially offset by the
sale of OBX rental equipment in the first three months of the
period.
For the three- and six-month periods ended March 31, 2021, the
Company’s traditional seismic products generated $0.8 million and
$1.8 million respectively, reflecting decreases of 61.1% and 59.3%
for the same periods one year ago. Demand for the Company’s
traditional seismic products has declined as a result of reductions
in seismic exploration by oil and gas companies. The destruction of
demand for oil and gas as a consequence of the impacts from
COVID-19 on travel and overall economic activity continues to
negatively affect demand for these products.
For the three- and six-month periods ended March 31, 2021, the
Company’s wireless seismic products generated revenue of $14.8
million and $26.5 million respectively. These figures represent a
respective decrease of 8.1% and increase of 6.0% when compared to
$16.1 million and $25.0 million for the equivalent three- and
six-month periods a year ago. Figures for the recent three- and
six-month periods both benefit from the recognition of $12.5
million in revenue from the sale of a wireless land system
delivered in the second quarter of the Company’s 2020 fiscal year.
Excluding this sale, revenue from wireless seismic products for the
three- and six-month periods ended March 31, 2021 was $2.3 million
and $14.0 million. The reduced revenue of these periods in
comparison to the equivalent periods last year is the result of
fewer rentals of the Company’s OBX marine systems, partially offset
for the six months period ended March 31, 2021, by a $9.9 million
sale of used OBX rental equipment. As certain rental contracts for
the Company’s OBX systems have run to completion, many of the
subsequent planned projects intending to utilize the OBX were
unable to commence due to worldwide COVID-19 related lockdowns and
travel restrictions. The Company believes the majority of such
projects will resume as the pandemic draws to an end.
For the three- and six-month periods ended March 31, 2021, the
Company’s reservoir seismic products generated revenue of $571,000
and $600,000 respectively. This reflects respective increases of
69.4% and 8.1% when compared to the three- and six-month periods
last year. The increase in both periods is due to a greater amount
of performed engineering services. The Company believes the
foremost opportunity for meaningful revenue from these products
resides in future contracts for the design, manufacture, and
deployment of permanent reservoir monitoring (PRM) systems. The
Company is engaged in several discussions at various stages with
multiple oil and gas producers in regard to PRM systems. Although
the Company has the largest installed base of PRM systems in the
world, it has not received an order for such a system since
November 2012. However, the Company believes that increased energy
demands, brought on by global recovery from the COVID-19 pandemic,
will reinflate demand for oil and gas, and that its PRM systems
provide the preeminent tool for oil and gas companies to maximize
production from existing assets at lower costs and reduced carbon
footprint.
Adjacent Markets Segment
For the three- and six-month periods ended March 31, 2021,
revenue from the Company’s Adjacent Markets segment totaled $7.6
million and $14.5 million respectively. These figures represent an
increase of 7.0% and 9.8% respectively when compared with $7.1
million and $13.2 million for the three- and six-month periods one
year ago. The increase in both periods is largely the result of
greater sales of the Company’s smart water meter cable and
connector products, augmented by higher demand for its contract
manufacturing services. The increases in both periods are partially
offset by decreases in sales of the Company’s graphic imaging
products. Many of the Company’s customers for these products depend
on attended sports events and other social gatherings which have
been largely curtailed as a result of the COVID-19 pandemic. As
recovery from the pandemic progresses and such activities resume,
management believes demand for these products will increase
accordingly.
Emerging Markets Segment
For the three- and six-month periods ended March 31, 2021, the
Company’s Emerging Markets segment generated revenue of $165,000
and $9.0 million respectively. This compares with $372,000 and
$469,000 in the equivalent three- and six-month periods a year ago.
The decrease over the three-month period with respect to last year
is the result of fewer sales of the Company’s specialty border and
perimeter security products in those comparative three months. The
large increase over last year’s comparative six-month period is a
result of fulfilling the majority of a singular contract with the
CBP, U.S. Border Patrol. The contract, awarded in April 2020 to the
Company’s Quantum subsidiary, provides an advanced technology
border and perimeter security solution to the Department of
Homeland Security. The Company believes additional contracts will
follow as the efficacy and value of its unique seismic acoustic
technologies and innovative data analytics are fully deployed and
demonstrated. Management further believes its systems are fully
aligned and complimentary to the U.S. government’s stated
intentions of deploying high technology means and methods to
protect U.S. borders.
Balance Sheet and Liquidity
For the six months ended March 31, 2021, the Company used $3.9
million in cash and cash equivalents from operating activities. The
Company generated $4.7 million of cash for investment activities
that included $10.0 million in proceeds from the sale of used
rental equipment, which were partially offset by $3.8 million used
for the purchase of short-term investments and $1.7 million used
for investments to property, plant, and equipment. The Company used
$2.3 million in financing activities through purchases of treasury
stock pursuant to a stock buyback program authorized by the
Company’s Board of Directors. The stock buyback program authorizes
the Company to repurchase up to $5.0 million of its common shares
in the open market. As of March 31, 2021, the Company had
repurchased a total of 275,188 shares under the program. At March
31, 2021, Geospace had $35.1 million in cash, cash equivalents, and
short-term investments compared with $32.7 million at September 30,
2020. In addition, at March 31, 2021, the Company had $18.5 million
in available borrowing from its credit agreement with Frost Bank,
of which no borrowed amounts are outstanding. Thus, the Company’s
total liquidity as of March 31, 2021 was $53.6 million. The Company
additionally owns unencumbered property and real estate in both
domestic and international locations.
Wheeler concluded, “Unfortunately, COVID-19 has not gone away.
But fortunately, nor has our resolve to overcome its challenges.
Although many people continue to be impacted, relief seems to be in
sight, especially as vaccines are more broadly distributed. In
parts of the U.S., more than 40% of the population has been fully
vaccinated, and in some countries even higher rates have been
achieved. As economic conditions improve, the engines of commerce
everywhere will accelerate. We believe this will translate into
higher demand for our products and services. And we believe those
products that have seen growing demand despite the pandemic will
continue to climb upward. In the broader landscape, the world will
need energy to fuel its rebounding economies. And it will need even
more energy to raise the quality of life for those portions of
society continuing their journey out of poverty and to higher
standards of living. Oil and gas will remain the primary means of
supplying this energy for some time to come. In the course of time,
Geospace has navigated a continuum of cyclical industry ups and
downs, and it appears that a pandemic will now be added to that
list of overcome challenges. In steering our course, we have
exercised conservative management and consistently maintained a
strong balance sheet with zero debt and ample liquidity. All the
while and without interruption, we have steadfastly advanced our
technologies to new levels across multiple products and diversified
our interests into new markets. We believe this measurable success
will continue. I’d like to personally thank all of our hard-working
employees, valued clients, and trusted shareholders for their help
and support as we strive to accomplish even more.”
Conference Call
Information
Geospace Technologies will host a conference call to review its
fiscal year 2021 second quarter financial results on May 7, 2021 at
10:00 a.m. Eastern Time (9 a.m. Central). Participants can access
the call at (866) 342-8591 (US) or (203) 518-9822 (International).
Please reference the conference ID: GEOSQ221 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
our website at www.geospace.com.
About Geospace
Technologies
Geospace principally designs and manufactures seismic
instruments and equipment. We market our seismic products to the
oil and gas industry to locate, characterize and monitor
hydrocarbon-producing reservoirs. We also market our seismic
products to other industries for vibration monitoring, border and
perimeter security and various geotechnical applications. We design
and manufacture other products of a non-seismic nature, including
water meter products, imaging equipment and offshore cables.
Forward Looking
Statements
This press 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”, “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 our 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, among others, statements that
we make regarding our expected operating results, the adoption,
results and success of our transactions with Quantum and the
OptoSeis® technology, the adoption and sale of our products in
various geographic regions, potential tenders for PRM systems,
future demand for OBX systems, the completion of new orders for
channels of our GCL system, the fulfillment of customer payment
obligations, the impact of the coronavirus (COVID-19) pandemic, our
ability to manage changes and the continued health or availability
of management personnel, volatility and direction of oil prices,
anticipated levels of capital expenditures and the sources of
funding therefor, and our strategy for growth, product development,
market position, financial results and the provision of accounting
reserves. These forward-looking statements reflect our current
judgment about future events and trends based on the information
currently available to us. 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® technology
transactions to yield positive operating results, decreases in
commodity price levels, 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, inability to realize value from bonds,
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.
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, 2021
March 31, 2020
March 31, 2021
March 31, 2020
Revenue:
Products
$
21,604
$
9,517
$
48,326
$
18,600
Rental
2,288
16,390
4,026
25,012
Total revenue
23,892
25,907
52,352
43,612
Cost of revenue:
Products
17,755
9,722
34,585
19,625
Rental
5,290
8,280
10,195
13,585
Total cost of revenue
23,045
18,002
44,780
33,210
Gross profit
847
7,905
7,572
10,402
Operating expenses:
Selling, general and administrative
5,478
6,066
10,832
12,063
Research and development
3,765
4,225
7,285
8,521
Change in estimated fair value of
contingent consideration
(221
)
972
(918
)
972
Bad debt expense
1
131
8
158
Total operating expenses
9,023
11,394
17,207
21,714
Loss from operations
(8,176
)
(3,489
)
(9,635
)
(11,312
)
Other income (expense):
Interest expense
—
(11
)
—
(23
)
Interest income
812
216
1,133
350
Foreign exchange gains (losses), net
(36
)
108
113
(24
)
Other, net
277
(28
)
274
(57
)
Total other income, net
1,053
285
1,520
246
Loss before income taxes
(7,123
)
(3,204
)
(8,115
)
(11,066
)
Income tax expense
61
607
119
2,027
Net loss
$
(7,184
)
$
(3,811
)
$
(8,234
)
$
(13,093
)
Loss per common share:
Basic
$
(0.53
)
$
(0.28
)
$
(0.61
)
$
(0.97
)
Diluted
$
(0.53
)
$
(0.28
)
$
(0.61
)
$
(0.97
)
Weighted average common shares
outstanding:
Basic
13,466,614
13,541,404
13,519,638
13,503,486
Diluted
13,466,614
13,541,404
13,519,638
13,503,486
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands except share
amounts)
(unaudited)
March 31, 2021
September 30, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
31,246
$
32,686
Short-term investments
3,865
—
Trade accounts and notes receivable,
net
10,531
13,778
Unbilled receivables
2,707
—
Inventories, net
15,313
16,933
Asset held for sale
1,732
587
Prepaid expenses and other current
assets
2,179
953
Total current assets
67,573
64,937
Non-current notes receivable
3,077
—
Non-current inventories, net
24,580
16,930
Rental equipment, net
38,382
54,317
Property, plant and equipment, net
29,728
29,874
Operating right-of-use assets
1,309
—
Goodwill
4,337
4,337
Other intangible assets, net
7,465
8,331
Deferred cost of revenue and other
assets
332
8,119
Total assets
$
176,783
$
186,845
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable trade
$
5,228
$
1,593
Contingent consideration
2,324
—
Operating lease liabilities
199
—
Deferred revenue and other current
liabilities
8,454
8,753
Total current liabilities
16,205
10,346
Non-current contingent consideration
7,720
10,962
Non-current operating lease
liabilities
1,135
—
Non-current deferred revenue and other
liabilities
28
4,567
Total liabilities
25,088
25,875
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; 13,741,096 and
13,670,639 shares issued, respectively;
and 13,465,908 and 13,670,639 shares
137
137
outstanding, respectively
Additional paid-in capital
91,992
90,965
Retained earnings
78,332
86,566
Accumulated other comprehensive loss
(16,438
)
(16,698
)
Treasury stock, at cost, 275,188 shares at
March 31, 2021
(2,328
)
—
Total stockholders’ equity
151,695
160,970
Total liabilities and stockholders’
equity
$
176,783
$
186,845
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
March 31, 2021
March 31, 2020
Cash flows from operating activities:
Net loss
$
(8,234
)
$
(13,093
)
Adjustments to reconcile net loss to net
cash provided (used in) by operating activities:
Deferred income tax benefit
(1
)
(34
)
Rental equipment depreciation
7,772
9,269
Property, plant and equipment
depreciation
1,970
2,057
Amortization of intangible assets
866
866
Accretion of discounts on short-term
investments
3
—
Stock-based compensation expense
1,027
1,123
Bad debt expense
8
158
Inventory obsolescence expense
1,155
1,966
Change in estimate of collectability of
rental revenue
—
7,993
Change in estimated fair value of
contingent consideration
(918
)
972
Gross profit from sale of used rental
equipment
(4,150
)
(425
)
Loss (gain) on disposal of property, plant
and equipment
6
(153
)
Gain on transfer of investment in
security
(269
)
—
Effects of changes in operating assets and
liabilities:
Trade accounts and notes receivables
190
(771
)
Unbilled receivables
(2,707
)
—
Inventories
(6,652
)
1,760
Deferred cost of revenue and other
assets
6,525
(8,440
)
Accounts payable trade
3,629
871
Deferred revenue and other liabilities
(4,153
)
1,607
Net cash provided by (used in) operating
activities
(3,933
)
5,726
Cash flows from investing activities:
Purchase of property, plant and
equipment
(1,673
)
(2,785
)
Proceeds from the sale of property, plant
and equipment
2
180
Investment in rental equipment
(59
)
(5,238
)
Proceeds from the sale of used rental
equipment
9,991
2,100
Purchases of short-term investments
(3,800
)
—
Proceeds from investment security
transaction
269
—
Net cash provided by (used in) investing
activities
4,730
(5,743
)
Cash flows from financing activities:
Purchase of treasury stock
(2,328
)
—
Net cash used in financing activities
(2,328
)
—
Effect of exchange rate changes on
cash
91
1
Decrease in cash and cash equivalents
(1,440
)
(16
)
Cash and cash equivalents, beginning of
fiscal year
32,686
18,925
Cash and cash equivalents, end of fiscal
period
$
31,246
$
18,909
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash paid for interest
$
—
$
23
Cash paid for income taxes
70
2,074
Inventory transferred to (from) rental
equipment
(504
)
6,126
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
SUMMARY OF SEGMENT REVENUE AND
OPERATING INCOME (LOSS)
(in thousands)
(unaudited)
Three Months Ended
Six Months Ended
March 31, 2021
March 31, 2020
March 31, 2021
March 31, 2020
Oil and Gas Markets
Traditional seismic exploration product
revenue
$
789
$
2,030
$
1,786
$
4,384
Wireless seismic exploration product
revenue
14,772
16,067
26,509
25,004
Reservoir product revenue
571
337
600
555
16,132
18,434
28,895
29,943
Adjacent Markets segment revenue:
Industrial product revenue
4,977
4,186
9,384
7,782
Imaging product revenue
2,618
2,915
5,111
5,418
7,595
7,101
14,495
13,200
Emerging Markets segment revenue:
Border and perimeter security product
revenue
165
372
8,962
469
Corporate
—
—
—
—
Total revenue
$
23,892
$
25,907
$
52,352
$
43,612
Three Months Ended
Six Months Ended
March 31, 2021
March 31, 2020
March 31, 2021
March 31, 2020
Operating income (loss):
Oil and Gas Markets segment
$
(5,465
)
$
1,310
$
(11,451
)
$
(2,584
)
Adjacent Markets segment
1,562
1,214
2,822
2,065
Emerging Markets segment
(1,189
)
(2,500
)
5,290
(3,865
)
Corporate
(3,084
)
(3,513
)
(6,296
)
(6,928
)
Total operating loss
$
(8,176
)
$
(3,489
)
$
(9,635
)
$
(11,312
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506006043/en/
Contact: Rick Wheeler President and CEO TEL: 713.986.4444 FAX:
713.986.4445
Geospace Technologies (NASDAQ:GEOS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Geospace Technologies (NASDAQ:GEOS)
Historical Stock Chart
From Apr 2023 to Apr 2024
