Geospace Technologies (GEOS) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Geospace Technologies reported Q1 FY2025 revenue and net income declines, with a shift to net cash outflow from operations Consolidated Balance Sheets Total assets increased to $159.9 million driven by receivables, while cash and short-term investments decreased - Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Sep 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $1,410 | $6,895 | ($5,485) | | Short-term investments | $20,655 | $30,227 | ($9,572) | | Trade accounts and financing receivables, net | $40,645 | $21,868 | $18,777 | | Total current assets | $95,085 | $89,366 | $5,719 | | Total assets | $159,939 | $152,194 | $7,745 | | Liabilities & Equity | | | | | Total current liabilities | $16,888 | $17,197 | ($309) | | Total liabilities | $17,229 | $17,570 | ($341) | | Total stockholders' equity | $142,710 | $134,624 | $8,086 | Consolidated Statements of Operations Total revenue decreased by 25.6% year-over-year to $37.2 million, significantly impacting operating and net income - Quarterly Statement of Operations (in thousands, except per share data) | Metric | Q1 FY2025 (ended Dec 31, 2024) | Q1 FY2024 (ended Dec 31, 2023) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $37,223 | $50,032 | -25.6% | | Gross Profit | $20,149 | $22,236 | -9.4% | | Income from Operations | $7,835 | $12,837 | -39.0% | | Net Income | $8,376 | $12,679 | -34.0% | | Diluted EPS | $0.65 | $0.94 | -30.9% | Consolidated Statements of Cash Flows Operating activities used $11.5 million in cash, a significant shift from prior year, primarily due to working capital - Quarterly Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 FY2025 (ended Dec 31, 2024) | Q1 FY2024 (ended Dec 31, 2023) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($11,509) | $2,652 | | Net cash provided by (used in) investing activities | $6,287 | ($2,740) | | Net cash used in financing activities | ($197) | $0 | | Increase (decrease) in cash and cash equivalents | ($5,485) | $104 | Notes to Consolidated Financial Statements Notes detail revenue recognition, segment reorganization, and significant credit risk concentration with one customer - The company has a significant concentration of credit risk, with one customer accounting for $18.7 million in revenue for the quarter and a receivable balance of $22.5 million as of December 31, 2024[28] - Effective October 1, 2024, the company reorganized its business into three new operating segments: Smart Water, Energy Solutions, and Intelligent Industrial, and changed its cost allocation methodology[71][72] - Product Revenue by New Segment (in thousands) | Segment | Q1 FY2025 (ended Dec 31, 2024) | Q1 FY2024 (ended Dec 31, 2023) | | :--- | :--- | :--- | | Smart Water | $7,288 | $4,234 | | Energy Solutions | $19,826 | $33,706 | | Intelligent Industrial | $5,531 | $5,774 | | Total | $32,645 | $43,714 | - The company has a $15 million revolving credit facility expiring in July 2025. As of December 31, 2024, there were no borrowings outstanding, and availability was $12.1 million[64][120] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue decline to lower Energy Solutions sales, partially offset by Smart Water growth, with increased operating expenses - The company's diversification strategy focuses on expanding the Smart Water and Intelligent Industrial segments to counterbalance the volatility of the Energy Solutions segment[101] - A shift from rentals to purchases of OBX marine wireless nodes was observed, indicating customers' confidence in future backlog[102] - The company is responding to a tender for a large-scale seabed Permanent Reservoir Monitoring (PRM) system, with an award expected in the third quarter of fiscal 2025. The company has not received an order for a large-scale system since 2012[90] - Segment Revenue and Operating Income (Loss) (in thousands) | Segment | Revenue Q1 FY25 | Revenue Q1 FY24 | Operating Income (Loss) Q1 FY25 | Operating Income (Loss) Q1 FY24 | | :--- | :--- | :--- | :--- | :--- | | Smart Water | $7,288 | $4,234 | $370 | $1,095 | | Energy Solutions | $24,282 | $39,911 | $13,282 | $15,068 | | Intelligent Industrial | $5,577 | $5,813 | ($940) | ($191) | Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Geospace Technologies is exempt from market risk disclosure requirements - As a smaller reporting company, Geospace Technologies is exempt from the requirement to provide disclosures about market risk under Item 305(e) of Regulation S-K[127] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Based on an evaluation as of December 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[129] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[130] PART II. OTHER INFORMATION Risk Factors The company faces risks from increased tariffs and trade restrictions due to significant international sales and foreign raw material reliance - The company is subject to risks from tariffs and trade restrictions due to significant international sales (approx. 50% of revenue) and procurement of raw materials from foreign countries like China[133] - Escalating trade tensions, particularly between the U.S. and China, and regulatory uncertainty could lead to increased costs, decreased profit margins, and reduced product competitiveness[133] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 19,994 shares of common stock under its $7 million stock repurchase program, with $0.4 million remaining - Stock Repurchase Activity (Q1 FY2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2024 | — | $— | | Nov 2024 | — | $— | | Dec 2024 | 19,994 | $9.98 | - The Board authorized a stock repurchase program of up to $7 million. As of December 31, 2024, approximately $418,000 remains available for repurchase under this program[134] Exhibits This section lists exhibits filed with Form 10-Q, including an employment termination agreement and CEO/CFO certifications - The report includes several exhibits, such as an Employment Termination Agreement, CEO/CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and iXBRL financial statements[135][137]