Geospace Technologies Corporation Reports Profitable First Quarter of Fiscal Year 2024 and Highest Quarterly Revenue in Nearly Ten Years
- 60% increase in revenue compared to the year-ago quarter
- Net income of $12.7 million for the first quarter of fiscal year 2024
- Conversion of a $20 million rental contract to a $30 million sale
- Significant revenue increase in the Oil and Gas Markets segment
- Unexpected sale of the Mariner™ system brought a significant amount of revenue forward in the first quarter that would have otherwise been received over the course of the year
- Decrease in revenue from the Adjacent Markets segment
Insights
The reported 60% increase in revenue for Geospace Technologies Corporation is a significant metric that reflects the company's operational success and market demand for its products, particularly the Mariner™ seismic data acquisition product. The conversion of a rental contract to a sale, resulting in a $30 million transaction, is a notable event that merits attention from investors. This not only boosts current revenue but also alters future revenue streams, as rental income would have been recognized over a longer period. However, investors should be aware of the management's caution regarding the 'lumpiness' of future sales, which suggests potential volatility in revenue. The strong cash position and unutilized credit facilities provide the company with financial flexibility, which is a positive indicator for its ability to invest in growth opportunities or weather downturns in the market.
The oil and gas market segment shows a robust demand, evidenced by the 98% increase in revenue compared to the prior year. This growth is driven by the sales of the Mariner™ ocean bottom node, indicating a market trend towards advanced seismic exploration technologies. The shift in industry investment towards conventional seismic exploration and 4D time-lapse monitoring projects can be seen as a response to the evolving energy landscape, with companies seeking to optimize resource extraction and reduce exploration risks. Geospace's positioning in this segment appears to be strong, given the reported industry interest. However, the reliance on a few high-value transactions for revenue generation could introduce risk due to the unpredictability of such sales.
Geospace's Emerging Markets segment, though currently a smaller contributor to the overall revenue, holds strategic importance due to its involvement with carbon capture monitoring projects. With increasing global emphasis on sustainability and carbon management, the potential growth in this segment could represent a significant opportunity for the company. The slow pace of project development, as mentioned by the management, is consistent with the industry's cautious approach to new technologies and regulatory compliance. The company's anticipation of additional government contracts and increased quoting activities suggests optimism for future growth, but stakeholders should monitor this progress closely for a more accurate assessment of the segment's potential.
Quarterly Earnings Strengthen by Significant Demand for Newly Released Mariner™ Seismic Data Acquisition Product
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
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
Wireless Seismic Exploration Products revenue totaled
Adjacent Markets Segment
Revenue from the Company’s Adjacent Markets segment totaled
Emerging Markets Segment
The Company’s Emerging Markets segment generated revenue of
Balance Sheet and Liquidity
For the three-month period ended December 31, 2023, the Company generated
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
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, |
|
|
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
Source: Geospace Technologies
FAQ
What was Geospace Technologies Corporation's revenue for the first quarter of fiscal year 2024?
What was the net income for Geospace Technologies Corporation in the first quarter of fiscal year 2024?
What caused the revenue increase in the Oil and Gas Markets segment?
What was the revenue from Geospace Technologies Corporation's Adjacent Markets segment in the first quarter of fiscal year 2024?
What was the revenue from Geospace Technologies Corporation's Emerging Markets segment in the first quarter of fiscal year 2024?
What is Geospace Technologies Corporation's capital expenditure budget for fiscal year 2024?
