GEOS Geospace Technologies Corporation

Company Appoints Former Sercel President Richard Kelley as Chief Operating Officer

Company Announces Stock Repurchase Program

Geospace Technologies Corporation (NASDAQ: GEOS) (the “Company”) today announced results for its second quarter ended March 31, 2024. For the three-months ended March 31, 2024, Geospace reported revenue of $24.3 million, compared to revenue of $31.4 million for the comparable year-ago quarter. Net loss for the three-months ended March 31, 2024 was $4.3 million, or ($0.32) per diluted share, compared to net income of $4.6 million, or $0.35 per diluted share, for the quarter ended March 31, 2023.

For the six-months ended March 31, 2024, Geospace reported revenue of $74.3 million compared to revenue of $62.5 million for the comparable year-ago period. Net income for the six-months ended March 31, 2024 was $8.4 million, or $0.62 per diluted share, compared to net income of $4.5 million, or $0.35 per diluted share, for the six-months ended March 31, 2023.

Management’s Comments

Walter R. (“Rick”) Wheeler, President and CEO of the Company said, “With the first six months of fiscal year 2024 behind us, the company has achieved positive net income of $8.4 million, or $0.62 per share. This serves as strong indication that our strategic efforts to continue the profitability established last fiscal year remain on track. In addition, the longstanding strength of our balance sheet with no debt and $51.2 million in cash and short-term investments remains firmly intact. However, as a result of low utilization of our OBX and Mariner ocean bottom nodes, our second quarter Oil and Gas Markets segment revenue fell short of the previous six quarters, which led to the overall net loss of $4.3 million for the second quarter. As mentioned in our first quarter conference call, some gaps in our OBX rental contracts were expected, which became a driving factor in lowering second quarter revenue. In addition, rental revenue that would have been received in the second quarter was brought forward into the first quarter when a rental contract for our new Mariner™ ocean bottom node system was converted to a $30 million sale. Despite these circumstances affecting the second quarter, we believe the second half of the fiscal year will see better utilization of our ocean bottom nodes which should bolster performance of our Oil and Gas Markets segment.

Our Adjacent Markets segment performed well in the second quarter, generating revenue of $12.2 million. This represents the third best quarterly performance of this segment in the company’s history, almost matching the record setting amount of last year’s second quarter. We believe our conscious expansion of product lines and nurtured growth within the Adjacent Markets segment continues to meet our longstanding strategy to create an increased stable source of revenue with less volatility than our Oil and Gas Markets segment.

Our Emerging Markets segment also contributed meaningful revenue in the second quarter, adding $1.1 million to the three-month total. The largest amount came from fulfilling a major portion of the nearly completed DARPA contract that we announced last year. Notably, several significant discussions remain underway for utilizing Quantum’s analytics and SADAR array monitoring system. These include multiple government agency security projects as well as advanced monitoring projects in the energy and energy transition arenas where our technology could be uniquely applied. While these discussions are very productive, they are somewhat slow going, thus leaving the potential for larger revenue contributions in the next fiscal year."

Oil and Gas Markets Segment

Second quarter revenue from the Company’s Oil and Gas Markets segment totaled $10.8 million for the three months ended March 31, 2024. This compares to $18.4 million in revenue for the same period a year ago representing a decrease of 41%. Revenue for the six-month period ended March 31, 2024, is $50.8 million, an increase of 32% over the equivalent prior year period. The decrease in revenue for the three-month period was due to lower utilization for our marine OBX rental fleet. The increase in revenue for the six-month period is primarily due to a $30 million sale of our Mariner™ shallow water ocean bottom nodes, in the first quarter of fiscal year 2024, partially offset by a decrease in the utilization for our marine OBX rental fleet. Additionally, long term rental contracts for ocean bottom nodes concluded during this quarter and the equipment is undergoing maintenance in Houston to allow the products to return to service quickly. We continue to see strong demand for ocean bottom nodal surveys and expect increased utilization of our rental fleet in the second half of fiscal year 2024.

Adjacent Markets Segment

Revenue from the Company’s Adjacent Markets segment totaled $12.2 million for the three-month period ended March 31, 2024. This compares with $12.7 million from the equivalent year ago period, representing a decrease of 4%. Revenue for the six-month period ending March 31, 2024, was $22.1 million, a decrease of 6%, from the same period of the prior fiscal year. The decrease in revenue for both periods was due to lower demand for both our water meter products and industrial sensor products, partially offset by an increase in demand for our contract manufacturing services and thermal film products.

Emerging Markets Segment

The Company’s Emerging Markets segment generated revenue of $1.1 million for the three-month period ended March 31, 2024. Revenue for the six-month period was $1.3 million compared to $300,000 from the same prior year period. The increase in revenue from both periods is due to work performed on a $1.5 million government contract.

Balance Sheet and Liquidity

For the six-month period ended March 31, 2024, the Company used $6.3 million in cash and cash equivalents from operating activities. The Company generated $8.1 million of cash from investing activities that included $30.5 million in proceeds from the sale of rental equipment and $4.0 million in proceeds from the sale of short-term investments offset by $19.3 million in cash used for the purchase of short-term investments, $3.9 million for additions to the rental fleet and $3.2 million for additional property, plant and equipment investments.

As of March 31, 2024, the Company had $51.2 million in cash and short-term investments and maintained an additional borrowing availability of $11.3 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 fiscal year 2024, management anticipates a capital expenditure budget of $12 million including $7 million earmarked for additions to its rental equipment.

Corporate

On April 29, 2024, the company welcomed highly accomplished executive Richard (“Rich”) Kelley as its Executive Vice President and Chief Operating Officer. Kelley has 17 years of experience in the oil & gas seismic industry, serving as the Vice President of Operations and then President of Sercel, Inc. He brings an extensive background and international experience in quality and operational management within various manufacturing organizations. Before joining Sercel, his diverse experience as Vice President for KMT Aqua-Dyne, Inc., a Swedish-based industrial manufacturer, and Uson, a global leader in leak detection instrumentation, is highly aligned with Geospace’s strategy for the Adjacent Markets business segment. Earlier in his career, Kelley was Director of Manufacturing for Varco (now part of NOV), a manufacturer of pressure-control equipment used in the oilfield industry. Prior to his corporate career, Kelley served in the U.S. Navy and holds an MBA from the University of Houston and a Bachelor of Science degree in Mechanical Engineering from the University of Texas at Austin.

“Having previously served in the COO role at Geospace for many years, I know the importance of this position to our company,” said Wheeler. “We’re delighted to add Rich as a well-balanced, experienced team member. He brings a wealth of knowledge and leadership to Geospace that spans all the elements of engineering, manufacturing, business development, and operations. As we prepare for the future, I believe Rich’s addition to the Geospace family will be instrumental in maintaining a solid course to advance our company to the next level.”

Stock Repurchase Program

The Company also announced that its Board of Directors has authorized a stock repurchase program under which the Company may purchase up to $5 million of its outstanding common stock. Under the repurchase program, the Company may purchase shares of common stock on a discretionary basis from time to time through open market transactions through block trades, in privately negotiated transactions and pursuant to any trading plan that may be adopted by the Company’s management in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or otherwise. The timing and number of shares repurchased will depend on a variety of factors, including stock price, trading volume, and general business and market conditions. The repurchase program has no time limit, does not obligate the Company to acquire a specified number of shares and may be modified, suspended or discontinued at any time at the Company’s discretion. The repurchase plan will be funded using existing cash or future cash flow.

Conference Call Information

The Company will host a conference call to review its second quarter fiscal year 2024 financial results on Friday, May 10, 2024, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). (800) 267-6316 (US) or (203) 518-9814 (International). Please reference the conference ID: GEOSQ224 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

 

 

Six Months Ended

 

 

March 31, 2024

 

 

March 31, 2023

 

 

March 31, 2024

 

 

March 31, 2023

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

19,497

 

 

$

17,701

 

 

$

63,211

 

 

$

37,249

 

Rental

 

 

4,773

 

 

 

13,669

 

 

 

11,091

 

 

 

25,230

 

Total revenue

 

 

24,270

 

 

 

31,370

 

 

 

74,302

 

 

 

62,479

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

14,995

 

 

 

13,196

 

 

 

38,837

 

 

 

28,561

 

Rental

 

 

3,394

 

 

 

5,225

 

 

 

7,348

 

 

 

10,435

 

Total cost of revenue

 

 

18,389

 

 

 

18,421

 

 

 

46,185

 

 

 

38,996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

5,881

 

 

 

12,949

 

 

 

28,117

 

 

 

23,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

6,546

 

 

 

6,387

 

 

 

12,372

 

 

 

12,822

 

Research and development

 

 

3,863

 

 

 

3,483

 

 

 

7,465

 

 

 

7,741

 

Provision for credit losses

 

 

(22

)

 

 

17

 

 

 

(51

)

 

 

137

 

Total operating expenses

 

 

10,387

 

 

 

9,887

 

 

 

19,786

 

 

 

20,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposal of property

 

 

—

 

 

 

1,315

 

 

 

—

 

 

 

1,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

(4,506

)

 

 

4,377

 

 

 

8,331

 

 

 

4,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(44

)

 

 

(39

)

 

 

(100

)

 

 

(78

)

Interest income

 

 

247

 

 

 

127

 

 

 

482

 

 

 

283

 

Foreign currency transaction gains (losses), net

 

 

(20

)

 

 

185

 

 

 

(183

)

 

 

292

 

Other, net

 

 

7

 

 

 

6

 

 

 

(67

)

 

 

(6

)

Total other income, net

 

 

190

 

 

 

279

 

 

 

132

 

 

 

491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(4,316

)

 

 

4,656

 

 

 

8,463

 

 

 

4,589

 

Income tax expense

 

 

11

 

 

 

19

 

 

 

111

 

 

 

49

 

Net income (loss)

 

$

(4,327

)

 

$

4,637

 

 

$

8,352

 

 

$

4,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.32

)

 

$

0.35

 

 

$

0.63

 

 

$

0.35

 

Diluted

 

$

(0.32

)

 

$

0.35

 

 

$

0.62

 

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

13,343,793

 

 

 

13,156,715

 

 

 

13,297,324

 

 

 

13,111,866

 

Diluted

 

 

13,343,793

 

 

 

13,156,715

 

 

 

13,471,775

 

 

 

13,111,866

 

 

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands except share amounts)

(unaudited)

 

 

 

March 31, 2024

 

 

September 30, 2023

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,762

 

 

$

18,803

 

Short-term investments

 

 

30,448

 

 

 

14,921

 

Trade accounts and note receivable, net

 

 

15,330

 

 

 

21,373

 

Inventories, net

 

 

23,932

 

 

 

18,430

 

Prepaid expenses and other current assets

 

 

1,611

 

 

 

2,251

 

Total current assets

 

 

92,083

 

 

 

75,778

 

 

 

 

 

 

 

 

 

 

Non-current inventories, net

 

 

18,141

 

 

 

24,888

 

Rental equipment, net

 

 

15,077

 

 

 

21,587

 

Property, plant and equipment, net

 

 

24,552

 

 

 

24,048

 

Non-current trade accounts receivable

 

 

1,510

 

 

 

—

 

Operating right-of-use assets

 

 

590

 

 

 

714

 

Goodwill

 

 

736

 

 

 

736

 

Other intangible assets, net

 

 

4,601

 

 

 

4,805

 

Other non-current assets

 

 

408

 

 

 

486

 

Total assets

 

$

157,698

 

 

$

153,042

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable trade

 

$

4,955

 

 

$

6,659

 

Operating lease liabilities

 

 

257

 

 

 

257

 

Other current liabilities

 

 

9,863

 

 

 

12,882

 

Total current liabilities

 

 

15,075

 

 

 

19,798

 

 

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

397

 

 

 

512

 

Deferred tax liabilities, net

 

 

32

 

 

 

16

 

Total liabilities

 

 

15,504

 

 

 

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 13,362,090 and 13,188,489 shares outstanding, respectively

 

 

142

 

 

 

140

 

Additional paid-in capital

 

 

96,800

 

 

 

96,040

 

Retained earnings

 

 

70,212

 

 

 

61,860

 

Accumulated other comprehensive loss

 

 

(17,460

)

 

 

(17,824

)

Treasury stock, at cost, 841,992 shares

 

 

(7,500

)

 

 

(7,500

)

Total stockholders’ equity

 

 

142,194

 

 

 

132,716

 

Total liabilities and stockholders’ equity

 

$

157,698

 

 

$

153,042

 

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Six Months Ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

8,352

 

 

$

4,540

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Deferred income tax expense

 

 

15

 

 

 

—

 

Rental equipment depreciation

 

 

6,026

 

 

 

6,442

 

Property, plant and equipment depreciation

 

 

1,682

 

 

 

1,896

 

Amortization of intangible assets

 

 

204

 

 

 

430

 

Amortization of premiums (accretion of discounts) on short-term investments

 

 

(234

)

 

 

1

 

Stock-based compensation expense

 

 

762

 

 

 

676

 

Provision for (recovery of) credit losses

 

 

(51

)

 

 

137

 

Inventory obsolescence expense

 

 

110

 

 

 

1,836

 

Gross profit from sale of rental equipment

 

 

(20,553

)

 

 

(3,925

)

Gain on disposal of property

 

 

—

 

 

 

(1,315

)

Loss (gain) on disposal of equipment

 

 

10

 

 

 

(464

)

Effects of changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts and note receivable

 

 

5,963

 

 

 

(8,352

)

Inventories

 

 

(5,566

)

 

 

(7,882

)

Other assets

 

 

873

 

 

 

1,702

 

Accounts payable trade

 

 

(684

)

 

 

(574

)

Other liabilities

 

 

(3,180

)

 

 

(226

)

Net cash used in operating activities

 

 

(6,271

)

 

 

(5,078

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(3,166

)

 

 

(1,126

)

Proceeds from the sale of property, plant and equipment

 

 

2

 

 

 

4,221

 

Investment in rental equipment

 

 

(3,949

)

 

 

(635

)

Proceeds from the sale of rental equipment

 

 

30,502

 

 

 

8,794

 

Purchases of short-term investments

 

 

(19,293

)

 

 

—

 

Proceeds from the sale of short-term investments

 

 

4,000

 

 

 

900

 

Net cash provided by investing activities

 

 

8,096

 

 

 

12,154

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments on contingent consideration

 

 

—

 

 

 

(175

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

134

 

 

 

(205

)

Increase in cash and cash equivalents

 

 

1,959

 

 

 

6,696

 

Cash and cash equivalents, beginning of period

 

 

18,803

 

 

 

16,109

 

Cash and cash equivalents, end of period

 

$

20,762

 

 

$

22,805

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

—

 

 

$

26

 

Inventory transferred to rental equipment

 

 

5,352

 

 

 

82

 

GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES

SUMMARY OF SEGMENT REVENUE AND OPERATING INCOME (LOSS)

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 31, 2024

 

March 31, 2023

 

March 31, 2024

 

March 31, 2023

Oil and Gas Markets segment revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Traditional seismic exploration product revenue

 

 

$

3,548

 

 

$

3,391

 

 

$

5,311

 

 

$

6,146

Wireless seismic exploration product revenue

 

 

 

7,240

 

 

 

14,896

 

 

 

45,313

 

 

 

32,134

Reservoir product revenue

 

 

 

59

 

 

 

132

 

 

 

132

 

 

 

287

 

 

 

 

10,847

 

 

 

18,419

 

 

 

50,756

 

 

 

38,567

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjacent Markets segment revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Industrial product revenue

 

 

 

9,024

 

 

 

9,642

 

 

 

15,467

 

 

 

17,572

Imaging product revenue

 

 

 

3,211

 

 

 

3,066

 

 

 

6,583

 

 

 

5,958

 

 

 

 

12,235

 

 

 

12,708

 

 

 

22,050

 

 

 

23,530

Emerging Markets segment revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Border and perimeter security product revenue

 

 

 

1,113

 

 

 

191

 

 

 

1,347

 

 

 

284

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

75

 

 

 

52

 

 

 

149

 

 

 

98

Total revenue

 

 

$

24,270

 

 

$

31,370

 

 

$

74,302

 

 

$

62,479

 

 

Three Months Ended

 

Six Months Ended

 

 

March 31, 2024

 

March 31, 2023

 

March 31, 2024

 

March 31, 2023

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Oil and Gas Markets segment

 

 

$

(3,135

)

 

 

$

4,176

 

 

 

$

11,428

 

 

 

$

6,582

 

Adjacent Markets segment

 

 

 

2,796

 

 

 

 

3,055

 

 

 

 

4,830

 

 

 

 

4,802

 

Emerging Markets segment

 

 

 

(651

)

 

 

 

(1,007

)

 

 

 

(1,276

)

 

 

 

(2,220

)

Corporate

 

 

 

(3,516

)

 

 

 

(1,847

)

 

 

 

(6,651

)

 

 

 

(5,066

)

Total operating income (loss)

 

 

$

(4,506

)

 

 

$

4,377

 

 

 

$

8,331

 

 

 

$

4,098

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240509321734/en/

Media Contact: Caroline Kempf, ckempf@geospace.com, 321.341.9305