Q3 Produced Highest Quarterly Revenue Recorded
in Nine Years
Geospace Technologies Corporation (NASDAQ: GEOS) (the “Company”)
today announced results for its third quarter ended June 30, 2023.
For the three-months ended June 30, 2023, Geospace reported revenue
of $32.7 million, a 58% increase compared to revenue of $20.7
million for the comparable year-ago quarter. Net income for the
three-months ended June 30, 2023 was $3.2 million, or $0.24 per
diluted share, compared to a net loss of $6.6 million, or ($0.51)
per diluted share, for the quarter ended June 30, 2022.
For the nine-months ended June 30, 2023, Geospace reported
revenue of $95.2 million, a 50% increase compared to revenue of
$63.4 million for the comparable year-ago period. Net income for
the nine-months ended June 30, 2023 was $7.8 million, or $0.59 per
diluted share, compared to a net loss of $14.8 million, or ($1.14)
per diluted share, for the nine-months ended June 30, 2022.
Management’s Comments
Rick Wheeler, President, and Chief Executive Officer of Geospace
Technologies said, “We’re very excited to see our third quarter
performance further extend profitability for fiscal year 2023 by
$0.24 per share. Moreover, total revenue for the quarter of $32.7
million represents the highest quarterly figure recorded in nine
years. These results offer evidence of the intended positive impact
our longstanding diversification efforts and recent cost control
measures were designed to achieve.
A combination of increased demand for our Oil and Gas segment
products and continued growth in our Adjacent Markets segment
fueled both third quarter and nine-month results. In the Oil and
Gas segment, our rental fleet of OBX ocean bottom nodes is near
full utilization, reliably collecting high-resolution seismic data
for clients around the globe. This growing demand and our
innovation in this product domain were the impetus leading to our
recently announced $20 million contract with a major contractor for
the rental of our new shallow water Mariner® nodal system. Under
current market conditions, we believe demand for our Oil and Gas
segment products will remain strong into fiscal year 2024.
Our Adjacent Market segment had a notably great quarter, setting
yet another record with the highest quarterly revenue figure ever
reported. In just the first nine months of fiscal year 2023,
revenue is just short of last year’s full total and beats all other
prior fiscal year totals. Compared to last year, both the
three-month and nine-month periods ended June 30, 2023, grew by
almost 36%. The increase is driven largely by water meter cables
and industrial sensor products. Also during the quarter, our Aquana
subsidiary announced the release of its Actuator Valve Serial
(AVS), a remote shut-off valve designed to reduce the cost of
operations and enhance the safety of employees for water utilities.
As domestic municipalities continue to update their smart water
meter systems, we believe the long-term increase in demand for
these Adjacent Markets products will persist.
Our Emerging Markets segment contributed a small portion of
revenue during the three- and nine-month periods, primarily related
to previously announced government and defense industry contracts.
Further efforts remain ongoing to secure additional contracts in
perimeter security and energy transition applications such as
carbon storage, geothermal and mining. There may be more clarity on
some of these endeavors in the near future.
As was noted, from a financial perspective, Geospace delivered
its most successful quarter in many years, with quarterly revenue
outpacing that of the past nine years. We not only achieved
positive net income for the second consecutive quarter, but in
addition, we strengthened our balance sheet, garnering
approximately $27 million in cash and cash equivalents with
approximately $42 million in total liquidity. Also, we recently
completed a credit agreement with Woodforest National Bank that
will provide borrowings to significantly boost our liquidity.
However, we don’t anticipate a need for borrowing in the
foreseeable future. We look forward to a continuation of favorable
performance throughout fiscal year 2023 and into 2024, even though
there may be lulls in some elements of our commerce.”
Oil and Gas Markets Segment
Revenue from the Oil and Gas Markets segment totaled $17.7
million for the three-month ended June 30, 2023. Revenue from the
same period of the prior fiscal year was $9.5 million, an increase
of 85.7%. Revenue for the nine-month period ended June 30, 2023, is
$56.2 million, an increase of 63.9% over the equivalent prior year
period. The increase in revenue for both periods was due to higher
rental revenue from increased utilization of our marine OBX rental
fleet and higher demand for our seismic sensors. In addition to
ocean bottom node revenue, we recorded profitable revenue for our
traditional seismic exploration products for the first time in
nearly seven years due to the sale of marine streamer products.
Adjacent Markets Segment
Revenue from our Adjacent Markets products for the three months
ended June 30, 2023, is $14.9 million an increase of $3.9 million,
representing an increase of 35.9% from the corresponding period of
the prior fiscal year. The revenue for the nine-month period ended
June 30, 2023, was $38.4 million, an increase of 35.6%, from the
same period of the prior fiscal year. The increase in revenue is
attributable in part to a recent decision to increase manufacturing
capacity to meet demand for our water meter cable and connector
products. Revenue remains stable in our imaging product line where
efforts are underway to introduce new products to market at
strategically affordable price points for the multi-billion-dollar
screen print industry.
Emerging Markets
For the three-and nine-month periods ended June 30, 2023, the
Company’s Emerging Markets segment generated revenue of $0.1
million and $0.4 million respectively. For the similar periods from
fiscal year 2022, the Emerging Markets segment produced revenue of
$0.1 million and $0.6 million, respectively. Revenue from this
segment consists of on-going service and maintenance related to our
completed U.S. Customs and Border Protection contract as well as
other government contracts.
Balance Sheet and Liquidity
For the nine-month period ended June 30, 2023, the Company
generated $3.1 million in cash and cash equivalents from operating
activities. The Company generated $8.3 million of cash from
investing activities that included $11.1 million in proceeds from
the sale of rental equipment and $4.4 million in proceeds from the
sale of property and equipment. These increases in cash are offset
by $6.2 million invested in rental equipment and $1.9 million
invested in property, plant and equipment. The majority of
additions to the Company’s rental equipment come as a result of the
recently announced Mariner® rental agreement. As of June 30, 2023,
the Company had $27.3 million in cash and cash equivalents with no
borrowings outstanding. Additionally, the Company recently
completed a credit agreement with Woodforest National Bank that
will provide borrowings of up to $15 million. Effective July 26,
2023, the total liquidity was approximately $42 million. 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 third
quarter fiscal year 2023 financial results on August 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: GEOSQ323 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
Nine Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Revenue:
Products
$
19,727
$
13,463
$
56,976
$
48,060
Rental
12,988
7,228
38,218
15,322
Total revenue
32,715
20,691
95,194
63,382
Cost of revenue:
Products
14,522
12,460
43,083
37,310
Rental
4,214
4,580
14,649
13,909
Total cost of revenue
18,736
17,040
57,732
51,219
Gross profit
13,979
3,651
37,462
12,163
Operating expenses:
Selling, general and administrative
6,655
6,373
19,477
18,108
Research and development
4,356
4,108
12,097
14,050
Change in estimated fair value of
contingent consideration
—
(384
)
—
(5,042
)
Bad debt expense (recovery)
(178
)
88
(41
)
116
Total operating expenses
10,833
10,185
31,533
27,232
Gain on disposal of property
—
—
1,315
—
Income (loss) from operations
3,146
(6,534
)
7,244
(15,069
)
Other income (expense):
Interest expense
(22
)
(26
)
(100
)
(26
)
Interest income
88
402
371
722
Foreign exchange gains (losses), net
301
(341
)
593
(230
)
Other, net
(66
)
(7
)
(72
)
(43
)
Total other income, net
301
28
792
423
Income (loss) before income taxes
3,447
(6,506
)
8,036
(14,646
)
Income tax expense
219
68
268
170
Net income (loss)
$
3,228
$
(6,574
)
$
7,768
$
(14,816
)
Income (loss) per common share:
Basic
$
0.25
$
(0.51
)
$
0.59
$
(1.14
)
Diluted
$
0.24
$
(0.51
)
$
0.59
$
(1.14
)
Weighted average common shares
outstanding:
Basic
13,171,654
13,013,616
13,131,795
12,977,146
Diluted
13,320,881
13,013,616
13,157,919
12,977,146
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands except share
amounts)
(unaudited)
June 30, 2023
September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
27,264
$
16,109
Short-term investments
—
894
Trade accounts and notes receivable,
net
26,309
20,886
Inventories, net
19,603
19,995
Prepaid expenses and other current
assets
3,200
2,077
Total current assets
76,376
59,961
Non-current inventories, net
22,311
12,526
Rental equipment, net
18,381
28,199
Property, plant and equipment, net
21,919
26,598
Operating right-of-use assets
776
957
Goodwill
736
736
Other intangible assets, net
4,951
5,573
Other non-current assets
233
506
Total assets
$
145,683
$
135,056
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable trade
$
6,884
$
5,595
Contingent consideration
—
175
Operating lease liabilities
253
241
Other current liabilities
8,990
6,616
Total current liabilities
16,127
12,627
Non-current operating lease
liabilities
583
769
Deferred tax liabilities, net
16
13
Total liabilities
16,726
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; 14,028,481 and 13,863,233 shares issued,
respectively; and 13,186,489 and 13,021,241 shares outstanding,
respectively
140
139
Additional paid-in capital
95,741
94,667
Retained earnings
57,422
49,654
Accumulated other comprehensive loss
(16,846
)
(15,313
)
Treasury stock, at cost, 841,992
shares
(7,500
)
(7,500
)
Total stockholders’ equity
128,957
121,647
Total liabilities and stockholders’
equity
$
145,683
$
135,056
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
June 30, 2023
June 30, 2022
Cash flows from operating activities:
Net income (loss)
$
7,768
$
(14,816
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Deferred income tax expense (benefit)
1
(12
)
Rental equipment depreciation
9,204
10,500
Property, plant and equipment
depreciation
2,785
3,112
Amortization of intangible assets
622
1,365
Amortization of premiums (accretion of
discounts) on short-term investments
(50
)
89
Stock-based compensation expense
1,074
1,342
Bad debt expense (recovery)
(41
)
116
Inventory obsolescence expense
2,131
2,310
Change in estimated fair value of
contingent consideration
—
(5,042
)
Gross profit from sale of used rental
equipment
(4,318
)
(10,801
)
Gain on disposal of property
(1,315
)
—
Gain on disposal of equipment
(432
)
(9
)
Realized loss on short-term
investments
—
22
Realized foreign currency translation loss
from dissolution of foreign subsidiary
38
—
Effects of changes in operating assets and
liabilities:
Trade accounts and notes receivable
(10,561
)
1,455
Unbilled receivables
—
1,051
Inventories
(7,175
)
(1,705
)
Other assets
453
(250
)
Accounts payable trade
1,290
(2,223
)
Other liabilities
1,654
215
Net cash provided by (used in) operating
activities
3,128
(13,281
)
Cash flows from investing activities:
Purchase of property, plant and
equipment
(1,862
)
(913
)
Proceeds from the sale of equipment
724
9
Proceeds from the sale of property
3,682
—
Investment in rental equipment
(6,213
)
(4,121
)
Proceeds from the sale of used rental
equipment
11,095
5,929
Purchases of short-term investments
—
(450
)
Proceeds from the sale of short-term
investments
900
8,224
Net cash provided by investing
activities
8,326
8,678
Cash flows from financing activities:
Payments on contingent consideration
(175
)
(807
)
Debt issuance costs
—
(211
)
Purchase of treasury stock
—
(695
)
Net cash used in financing activities
(175
)
(1,713
)
Effect of exchange rate changes on
cash
(97
)
(282
)
Increase (decrease) in cash and cash
equivalents
11,155
(6,598
)
Cash and cash equivalents, beginning of
fiscal year
16,109
14,066
Cash and cash equivalents, end of fiscal
period
$
27,264
$
7,468
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash paid for income taxes
$
111
$
168
Issuance of note receivable related to
sale of used rental equipment
—
11,745
Inventory transferred to rental
equipment
117
1,194
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
Nine Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Oil and Gas Markets
Traditional seismic exploration product
revenue
$
3,363
$
1,592
$
9,509
$
3,428
Wireless seismic exploration product
revenue
13,786
7,233
45,920
29,467
Reservoir product revenue
523
692
810
1,422
17,672
9,517
56,239
34,317
Adjacent Markets segment revenue:
Industrial product revenue
11,678
7,465
29,250
18,471
Imaging product revenue
3,184
3,473
9,142
9,841
14,862
10,938
38,392
28,312
Emerging Markets segment revenue:
Border and perimeter security product
revenue
109
135
393
571
Corporate
72
101
170
182
Total revenue
$
32,715
$
20,691
$
95,194
$
63,382
Three Months Ended
Nine Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Operating income (loss):
Oil and Gas Markets segment
$
3,238
$
(3,695
)
$
9,820
$
(6,209
)
Adjacent Markets segment
4,346
1,841
9,148
4,341
Emerging Markets segment
(1,047
)
(1,405
)
(3,267
)
(3,609
)
Corporate
(3,391
)
(3,275
)
(8,457
)
(9,592
)
Total operating income (loss)
$
3,146
$
(6,534
)
$
7,244
$
(15,069
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810650719/en/
Media Contact: Caroline Kempf, ckempf@geospace.com,
321.341.9305
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