Geospace Technologies Corporation (NASDAQ: GEOS) (“the
“Company") today announced net income of $12.2 million, or $0.92
per diluted share, on revenue of $124.5 million for its fiscal year
ended September 30, 2023. This compares with a net loss of $22.9
million, or ($1.76) per diluted share, on revenue of $89.3 million
for the comparable year-ago period.
For the fourth quarter ended September 30, 2023, Geospace
Technologies (the “Company”) reported revenue of $29.3 million and
net income of $4.4 million, or $0.33 per diluted share. For the
comparable period last year, the Company recorded revenue of $25.9
million and a net loss of $8.0 million, or ($0.62) per diluted
share.
Management’s Comments
Walter R. (“Rick”) Wheeler, President and CEO of the Company
said, “We’re incredibly pleased to announce yet another quarter of
positive earnings to our shareholders. Combined with the successful
quarters earlier in the year, fiscal year 2023 closed with an
overall net income of $12.2 million. Moreover, revenue for the full
year of $124.5 million represents the largest figure recorded since
2014. Our improved performance is the result of accelerated efforts
by our dedicated employees in reducing costs and streamlining
operations, as well as better market conditions for our products in
both the Oil and Gas and Adjacent Markets segments. Increases in
utilization and rentals of our OBX ocean bottom nodes were the
largest revenue driver in fiscal year 2023. In fact, the company’s
total revenue from rentals more than doubled from last year’s
figure. Our conservative management and preservation of a strong
balance sheet with zero debt has given us the essential tools
necessary to maintain leadership in technology innovations, even in
depressed markets. We believe this has strengthened our ability to
take advantage of improving market conditions and will continue to
do so in the future. This is strongly evidenced by recent
developments in our Oil and Gas Markets segment. In the fourth
quarter, we announced a $3 million rental agreement for our highly
advanced Mariner™ product, a shallow water seabed seismic data
acquisition node. In addition, we announced a $5.7 million contract
with an international seismic company for specialized geophones
designed for use in their proprietary system. Prior to both of
these announcements was one in June of a $20 million rental
contract for our Mariner ocean bottom nodes. The delivery of this
system is expected to complete in the next few weeks with the
rental term commencing thereafter. Although gaps are expected to
occur in some of our OBX rental contracts, we anticipate the ocean
bottom node market will remain strong over the coming fiscal
year.
Results from our Adjacent Markets segment proved equally
compelling as total revenue for the fourth quarter and full fiscal
year ending September 30, 2023, came in at $10.6 and $49.0 million
respectively. The full year amount for the segment sets yet another
new record. Our efforts toward revenue diversification have seen
some success in the Adjacent Markets segment where several new
records were set over the course of fiscal year 2023. The
outstanding industrial product performance this year stems largely
from greater demand for our water meter cables and connectors,
which were the largest factor in pushing overall revenue growth of
the segment 25% over last year’s result.
The Company’s Emerging Markets segment generated $0.8 million in
the fourth quarter and $1.2 million over the full 2023 fiscal year.
During the second fiscal quarter, we announced a $1.5 million
contract with the Defense Advanced Projects Research Agency,
otherwise known as DARPA. The contract is a Phase II Small Business
Innovative Research (SBIR) contract to explore a new SADAR
capability designed to monitor energy sources of interest on nearby
land, water and air environments. Revenue over the course of the
fiscal year includes amounts derived from this contract as well as
fulfillment of a separate unrelated contract with a major defense
contractor. We continue to explore further opportunities for
contracts with DARPA and other governmental agencies as well as new
private sector applications for SADAR and Quantum’s analytics in
the energy transition market.
Complementing our operational success in fiscal year 2023 were
substantive gains on the Company’s balance sheet. In addition to
increasing stockholder equity by more than $11 million, we ended
fiscal 2023, with a total of $33.7 million in cash, cash
equivalents and short-term investments. We further maintained an
additional borrowing availability of $13.1 million under an unused
bank credit agreement with no borrowings outstanding. As a result,
our total liquidity, as of September 30, 2023, was $46.8 million.
In addition, we wholly own unencumbered properties and real estate
in both domestic and international locations.
As our new fiscal year begins, we’re enthusiastic about the
plans we have in motion to continue our profitability. While the
variability of our seismic industry contracts may result in uneven
quarterly revenue in the coming year, we remain encouraged by the
volume of planned exploration activity. Further, we intend to
regularly evaluate each business segment where those efforts are
focused on driving revenue opportunities while assessing additional
areas where costs can be reduced. We believe our strong balance
sheet and technological leadership will be pivotal to our success
in fiscal year 2024.”
Oil and Gas Markets Segment
Revenue from the Company’s Oil and Gas Markets segment totaled
$17.8 million for the three months ended September 30, 2023. This
compares to $14.8 million in revenue, an increase of 20% for the
same period a year ago. For the fiscal year, revenue from this
segment totaled $74.0 million versus $49.1 million for the same
prior year period. The increase for the three-month period is due
to higher utilization of our ocean bottom node rental fleet, higher
demand for our wireless seismic products and increased sales of our
marine products. The twelve-month increase in revenue is due to
higher utilization of our ocean bottom node rental fleet and sales
of our seismic sensors and marine products.
Revenue from the Company’s traditional exploration products
totaled $2.7 million and $12.2 million respectively for the
three-month and twelve-month periods ended September 30, 2023. This
compares to $3.2 million and $6.6 million, respectively to the same
periods a year ago.
Revenue from the Company’s wireless seismic products totaled
$14.9 million and $61.5 million respectively for the three- and
twelve-month periods ended September 30, 2023. This equates to a
33% increase and a 50% increase compared to the corresponding
respective year ago periods.
The Company’s reservoir seismic products generated $0.2 million
and $1.0 million in total revenue for the three-month and full year
periods ended September 30, 2023. This compares with $0.5 million
and $1.9 million for the equivalent periods one year earlier.
Adjacent Markets Segment
Revenue from the Company’s Adjacent Markets segment totaled
$10.6 million and $49.0 million for the three- and twelve-month
periods ended September 30, 2023. This compares with $10.9 million
and $39.2 million for the equivalent year ago periods. The slight
decrease for the three-month period is due to essentially the same
sales of the Company’s smart water meter cable and connector
products partially attributable to decreased sales of seismic
sensors to industrial customers, lower demand for the Company’s
contract manufacturing services and imaging products. The increase
in the 12-months period is the result of increased sales of the
Company’s smart water meter cable and connector products, increased
sales of seismic sensors to industrial customers, partially offset
by lower demand for contract manufacturing services and imaging
products.
Emerging Markets Segment
The Company’s Emerging Markets segment generated revenue of $0.8
million and $1.2 million for the three-month and full year periods
ended September 30, 2023. This compares with $0.1 million and $0.7
million for the similar three- and twelve-month periods of the
previous year. The Emerging Market segment has a backlog of
approximately $2.0 million that will be recognized in fiscal year
2024.
Balance Sheet and Liquidity
For the fiscal year ended September 30, 2023, the Company
generated $15.6 million in cash and cash equivalents from operating
activities. The Company used $11.9 million of cash from investing
activities with sources of cash that included $11.5 million in
proceeds from the sale of rental equipment, and $4.4 million for
net sales of property, plant and equipment. These sources of cash
were partially offset by net disbursements of $13.9 million for
purchases of short-term investments, $9.9 million for additions to
our rental fleet and $4.0 million in the purchase of property,
plant and equipment. As of September 30, 2023, the Company had
$33.7 million in cash, cash equivalents and short-term investments,
and maintained an additional borrowing availability of $13.1
million under its bank credit agreement with no borrowings
outstanding. In fiscal year 2024, management anticipates a capital
expenditure budget of $13 million including $9 million earmarked
for additions to its rental equipment.
Conference Call
Information
Geospace Technologies will host a conference call to review its
fourth quarter and fiscal year 2023 financial results on November
17, 2023, at 10:00 a.m. Eastern Time (9 a.m. Central). Participants
can access the call at (800) 225-9448 (US) or (203) 518-9848
(International). Please reference the conference ID: GEOSQ423 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, remote shutoff water
values and Internet of Things (IoT) platform and provide contract
manufacturing services.
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, potential impact of the
ongoing armed conflict between Russia and Ukraine, 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
Year Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Revenue:
Products
$
16,357
$
16,049
$
73,333
$
64,109
Rental
12,958
9,822
51,176
25,144
Total revenue
29,315
25,871
124,509
89,253
Cost of revenue:
Products
12,053
14,339
55,136
51,649
Rental
3,047
5,652
17,683
19,561
Total cost of revenue
15,087
19,991
72,819
71,210
Gross profit
14,228
5,880
51,690
18,043
Operating expenses:
Selling, general and administrative
6,475
5,374
25,952
23,482
Research and development
3,766
4,054
15,863
18,104
Goodwill impairment
—
4,336
—
4,336
Change in estimated fair value of
contingent consideration
—
7
—
(5,035
)
Bad debt expense (recovery)
(97
)
176
(138
)
292
Total operating expenses
10,144
13,947
41,677
41,179
Gain on disposal of property
—
—
1,315
—
Income (loss) from operations
4,084
(8,067
)
11,328
(23,136
)
Other income (expense):
Interest expense
(34
)
(39
)
(134
)
(65)
Interest income
168
253
539
976
Foreign currency transaction gains
(losses), net
401
(168
)
994
(22
)
Other, net
(86
)
(15
)
(158
)
(39
)
Total other income, net
449
30
1,241
453
Income (loss) before income taxes
4,533
(8,037
)
12,569
(22,683
)
Income tax expense
95
3
363
173
Net income (loss)
$
4,438
$
(8,040
)
$
12,206
$
(22,856
)
Income (loss) per common share:
Basic
$
0.34
$
(0.62
)
$
0.93
$
(1.76
)
Diluted
$
0.33
$
(0.62
)
$
0.92
$
(1.76
)
Weighted average common shares
outstanding:
Basic
13,188,489
13,020,191
13,146,085
12,987,996
Diluted
13,399,442
13,020,191
13,215,066
12,987,996
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share and
per share amounts)
(unaudited)
AS OF SEPTEMBER 30,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
18,803
$
16,109
Short-term investments
14,921
894
Trade accounts and notes receivable,
net
21,373
20,886
Inventories, net
18,430
19,995
Prepaid expenses and other current
assets
2,251
2,077
Total current assets
75,778
59,961
Non-current inventories, net
24,888
12,526
Rental equipment, net
21,587
28,199
Property, plant and equipment, net
24,048
26,598
Operating right-of-use assets
714
957
Goodwill
736
736
Other intangible assets, net
4,805
5,573
Other non-current assets
486
506
Total assets
$
153,042
$
135,056
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable trade
$
6,659
$
5,595
Contingent consideration
—
175
Operating lease liabilities
257
241
Other current liabilities
12,882
6,616
Total current liabilities
19,798
12,627
Non-current operating lease
liabilities
512
769
Deferred tax liabilities, net
16
13
Total liabilities
20,326
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, 14,030,481 and 13,863,233 shares issued,
respectively; and 13,188,489 and 13,021,241 shares outstanding,
respectively
140
139
Additional paid-in capital
96,040
94,667
Retained earnings
61,860
49,654
Accumulated other comprehensive loss
(17,824
)
(15,313
)
Treasury stock, at cost, 841,992
shares
(7,500
)
(7,500
)
Total stockholders’ equity
132,716
121,647
Total liabilities and stockholders’
equity
$
153,042
$
135,056
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(unaudited)
YEAR ENDED SEPTEMBER
30,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
12,206
$
(22,856
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Deferred income tax expense (benefit)
3
(17
)
Rental equipment depreciation
11,766
13,740
Property, plant and equipment
depreciation
3,704
4,143
Amortization of intangible assets
768
1,677
Goodwill impairment expense
—
4,336
Property, plant and equipment impairment
expense
—
401
Amortization of premiums (accretion of
discounts) on short-term investments
(144
)
96
Stock-based compensation expense
1,374
1,734
Bad debt expense (recovery)
(138
)
292
Inventory obsolescence expense
2,229
3,222
Change in estimated fair value of
contingent consideration
—
(5,035
)
Gross profit from sale of used rental
equipment
(4,424
)
(11,061
)
Loss (gain) on disposal of equipment
244
(54
)
Gain on disposal of property
(1,315
)
—
Realized loss on short-term
investments
—
—
Realized foreign currency translation loss
from dissolution of foreign subsidiary
38
22
Effects of changes in operating assets and
liabilities:
Trade accounts and notes receivable
(5,561
)
1,751
Unbilled receivables
—
1,051
Inventories
(11,026
)
(2,357
)
Other assets
442
349
Accounts payable trade
41
(786
)
Other liabilities
5,351
(683
)
Net cash used provided by (used in)
operating activities
15,558
(10,035
)
Cash flows from investing activities:
Purchase of property, plant and
equipment
(3,964
)
(1,130
)
Investment in rental equipment
(9,920
)
(4,832
)
Proceeds from the sale of equipment
724
54
Proceeds from the sale of property
3,682
—
Proceeds from the sale of used rental
equipment
11,478
11,583
Purchase of short-term investments
(24,782
)
(450
)
Proceeds from the sale of short-term
investments
10,900
8,924
Net cash provided by (used in) investing
activities
(11,882
)
14,149
Cash flows from financing activities:
Payments of contingent consideration
(175
)
(807
)
Debt issuance costs
(350
)
(211
)
Purchase of treasury stock
—
(695
)
Net cash used in financing activities
(525
)
(1,713
)
Effect of exchange rate changes on
cash
(457
)
(358
)
Increase in cash and cash equivalents
2,694
2,043
Cash and cash equivalents, beginning of
fiscal year
16,109
14,066
Cash and cash equivalents, end of fiscal
year
$
18,803
$
16,109
GEOSPACE TECHNOLOGIES
CORPORATION AND SUBSIDIARIES
SUMMARY OF SEGMENT REVENUE AND
OPERATING INCOME (LOSS)
(in thousands)
(unaudited)
Three Months Ended
Year Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Oil and Gas Markets
Traditional seismic exploration product
revenue
$
2,674
$
3,169
$
12,183
$
6,597
Wireless seismic exploration product
revenue
14,928
11,200
60,848
40,667
Reservoir product revenue
152
455
962
1,877
17,754
14,824
73,993
49,141
Adjacent Markets segment revenue:
Industrial product revenue
7,609
7,169
36,859
25,640
Imaging product revenue
3,038
3,690
12,180
13,531
10,647
10,859
49,039
39,171
Emerging Markets segment revenue:
Border and perimeter security product
revenue
841
140
1,234
711
Corporate
73
48
243
230
Total revenue
$
29,315
$
25,871
$
124,509
$
89,253
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Operating income (loss):
Oil and Gas Markets segment
$
5,939
$
(1,330
)
$
15,759
$
(7,539
)
Adjacent Markets segment
2,342
1,680
11,490
6,021
Emerging Markets segment
(736
)
(5,519
)
(4,003
)
(9,128
)
Corporate
(3,461
)
(2,898
)
(11,918
)
(12,490
)
Total operating income (loss)
$
4,084
$
(8,067
)
$
11,328
$
(23,136
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231116937410/en/
Caroline Kempf, ckempf@geospace.com, 321.341.9305
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