false
0001001115
0001001115
2023-08-10
2023-08-10
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM
8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 10, 2023
GEOSPACE TECHNOLOGIES CORPORATION
(Exact name of Registrant as Specified in Its Charter)
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Texas 001-13601 76-0447780
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
7007 Pinemont 77040
Houston
,
Texas
(Address of Principal Executive Offices) (Zip Code)
Registrant
'
s Telephone Number, Including Area Code: (
713
)
986-4444
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instructions A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Name of each exchange on which registered
Symbol(s)
Common Stock GEOS The
NASDAQ
Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s) 230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ((s) 240.12b-2
of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
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Item 2.02. Results of Operations and Financial Condition
On August 10, 2023, Geospace Technologies Corporation issued a press release
regarding its operating results for its second quarter 2023. The press release
is attached hereto as Exhibit 99.1. The foregoing description is qualified by
reference in its entirety to such exhibit.
In accordance with General Instruction B.2 of Form 8-K, the information in
Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall
not be deemed to be "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to
the liability of that section, and shall not be incorporated by reference into
any registration statement or other document filed under the Securities Act of
1933, as amended, or the Exchange Act, except as shall be expressly set forth
by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
Exhibit 99.1 Press Release dated August 10, 2023.
Exhibit 104 Cover Page Interactive Data (embedded within the Inline XBRL
document).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GEOSPACE TECHNOLOGIES CORPORATION
Date: August 10, 2023
By:/s/ Robert L. Curda
Robert L. Curda
Vice President, Chief Financial Officer & Secretary
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
GEOSPACE TECHNOLOGIES CORPORATION REPORTS PROFITABLE THIRD QUARTER
AND NINE-MONTH 2023 EARNINGS
Q3 Produced Highest Quarterly Revenue Recorded in Nine Years
HOUSTON, TX
-
August 10, 2023 -
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(R) 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(R) 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.
Media Contact: Caroline Kempf, ckempf@geospace.com
,
321.341.9305
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(R) 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.
# # #
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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:
$ 19,727 $ 13,463 $ 56,976 $ 48,060
Products
12,988 7,228 38,218 15,322
Rental
32,715 20,691 95,194 63,382
Total revenue
Cost of revenue:
14,522 12,460 43,083 37,310
Products
4,214 4,580 14,649 13,909
Rental
18,736 17,040 57,732 51,219
Total cost of revenue
13,979 3,651 37,462 12,163
Gross profit
Operating expenses:
6,655 6,373 19,477 18,108
Selling, general and administrative
4,356 4,108 12,097 14,050
Research and development
- (384 ) - (5,042 )
Change in estimated fair value of contingent consideration
(178 ) 88 (41 ) 116
Bad debt expense (recovery)
10,833 10,185 31,533 27,232
Total operating expenses
- - 1,315 -
Gain on disposal of property
3,146 (6,534 ) 7,244 (15,069 )
Income (loss) from operations
Other income (expense):
(22 ) (26 ) (100 ) (26 )
Interest expense
88 402 371 722
Interest income
301 (341 ) 593 (230 )
Foreign exchange gains (losses), net
(66 ) (7 ) (72 ) (43 )
Other, net
301 28 792 423
Total other income, net
3,447 (6,506 ) 8,036 (14,646 )
Income (loss) before income taxes
219 68 268 170
Income tax expense
$ 3,228 $ (6,574 ) $ 7,768 $ (14,816 )
Net income (loss)
Income (loss) per common share:
$ 0.25 $ (0.51 ) $ 0.59 $ (1.14 )
Basic
$ 0.24 $ (0.51 ) $ 0.59 $ (1.14 )
Diluted
Weighted average common shares outstanding:
13,171,654 13,013,616 13,131,795 12,977,146
Basic
13,320,881 13,013,616 13,157,919 12,977,146
Diluted
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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
June 30, 2023 September 30, 2022
ASSETS
Current
assets:
$ 27,264 $ 16,109
Cash and cash
equivalents
- 894
Short-term
investments
26,309 20,886
Trade accounts and
notes receivable, net
19,603 19,995
Inventories,
net
3,200 2,077
Prepaid expenses and
other current assets
76,376 59,961
Total current
assets
22,311 12,526
Non-current
inventories, net
18,381 28,199
Rental
equipment, net
21,919 26,598
Property, plant and
equipment, net
776 957
Operating
right-of-use assets
736 736
Goodwill
4,951 5,573
Other intangible
assets, net
233 506
Other non-current
assets
$ 145,683 $ 135,056
Total assets
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current
liabilities:
$ 6,884 $ 5,595
Accounts
payable trade
- 175
Contingent
consideration
253 241
Operating lease
liabilities
8,990 6,616
Other current
liabilities
16,127 12,627
Total current
liabilities
583 769
Non-current operating
lease liabilities
16 13
Deferred tax
liabilities, net
16,726 13,409
Total
liabilities
Commitments and
contingencies
Stockholders'
equity:
- -
Preferred stock, 1,000,000 shares authorized,
no shares issued and outstanding
140 139
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
95,741 94,667
Additional
paid-in capital
57,422 49,654
Retained
earnings
(16,846 ) (15,313 )
Accumulated other
comprehensive loss
(7,500 ) (7,500 )
Treasury stock, at
cost, 841,992 shares
128,957 121,647
Total stockholders'
equity
$ 145,683 $ 135,056
Total liabilities and
stockholders' equity
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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:
$ 7,768 $ (14,816 )
Net income
(loss)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
1 (12 )
Deferred income tax
expense (benefit)
9,204 10,500
Rental equipment
depreciation
2,785 3,112
Property, plant and
equipment depreciation
622 1,365
Amortization of
intangible assets
(50 ) 89
Amortization of premiums (accretion of
discounts) on short-term investments
1,074 1,342
Stock-based
compensation expense
(41 ) 116
Bad debt expense
(recovery)
2,131 2,310
Inventory
obsolescence expense
- (5,042 )
Change in estimated fair value
of contingent consideration
(4,318 ) (10,801 )
Gross profit from sale
of used rental equipment
(1,315 ) -
Gain on disposal
of property
(432 ) (9 )
Gain on disposal
of equipment
- 22
Realized loss on
short-term investments
38 -
Realized foreign currency translation loss
from dissolution of foreign subsidiary
Effects of changes in operating
assets and liabilities:
(10,561 ) 1,455
Trade accounts and
notes receivable
- 1,051
Unbilled
receivables
(7,175 ) (1,705 )
Inventories
453 (250 )
Other assets
1,290 (2,223 )
Accounts
payable trade
1,654 215
Other
liabilities
3,128 (13,281 )
Net cash provided by (used
in) operating activities
Cash flows from
investing activities:
(1,862 ) (913 )
Purchase of property,
plant and equipment
724 9
Proceeds from the
sale of equipment
3,682 -
Proceeds from the
sale of property
(6,213 ) (4,121 )
Investment in
rental equipment
11,095 5,929
Proceeds from the sale
of used rental equipment
- (450 )
Purchases of
short-term investments
900 8,224
Proceeds from the sale of
short-term investments
8,326 8,678
Net cash provided by
investing activities
Cash flows from
financing activities:
(175 ) (807 )
Payments on contingent
consideration
- (211 )
Debt issuance
costs
- (695 )
Purchase of
treasury stock
(175 ) (1,713 )
Net cash used in
financing activities
(124 ) (282 )
Effect of exchange
rate changes on cash
11,155 (6,598 )
Increase (decrease) in
cash and cash equivalents
16,109 14,066
Cash and cash equivalents,
beginning of fiscal year
$ 27,264 $ 7,468
Cash and cash equivalents,
end of fiscal period
SUPPLEMENTAL CASH
FLOW INFORMATION:
$ 111 $ 168
Cash paid for
income taxes
- 11,745
Issuance of note receivable related
to sale of used rental equipment
117 1,194
Inventory transferred
to rental equipment
- 172
Inventory transferred to
property, plant and equipment
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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 segment revenue
$ 3,363 $ 1,592 $ 9,509 $ 3,428
Traditional seismic exploration product revenue
13,786 7,233 45,920 29,467
Wireless seismic exploration product revenue
523 692 810 1,422
Reservoir product revenue
17,672 9,517 56,239 34,317
Adjacent Markets segment revenue:
11,678 7,465 29,250 18,471
Industrial product revenue
3,184 3,473 9,142 9,841
Imaging product revenue
14,862 10,938 38,392 28,312
Emerging Markets segment revenue:
109 135 393 571
Border and perimeter security product revenue
72 101 170 182
Corporate
$ 32,715 $ 20,691 $ 95,194 $ 63,382
Total revenue
Three Months Ended Nine Months Ended
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
Operating income (loss):
$ 3,238 $ (3,695 ) $ 9,820 $ (6,209 )
Oil and Gas Markets segment
4,346 1,841 9,148 4,341
Adjacent Markets segment
(1,047 ) (1,405 ) (3,267 ) (3,609 )
Emerging Markets segment
(3,391 ) (3,275 ) (8,457 ) (9,592 )
Corporate
$ 3,146 $ (6,534 ) $ 7,244 $ (15,069 )
Total operating income (loss)
{graphic omitted}
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