Geospace Technologies (GEOS) - 2025 Q2 - Quarterly Results

Financial Performance Summary Geospace Technologies reported significant revenue declines and widening losses for both Q2 and the first six months of fiscal 2025, driven by challenging market conditions Second Quarter Fiscal 2025 Results For the second quarter ended March 31, 2025, Geospace Technologies reported a significant decrease in revenue to $18.0 million from $24.3 million in the prior year's quarter, with the company's net loss widening to ($9.8) million, or ($0.77) per diluted share, compared to a net loss of ($4.3) million, or ($0.32) per diluted share, for the same period in 2024 Q2 FY2025 vs Q2 FY2024 Financial Highlights | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $18.0 million | $24.3 million | -25.9% | | Net Loss | ($9.8) million | ($4.3) million | Increased Loss | | Diluted EPS | ($0.77) | ($0.32) | Increased Loss | Six-Month Fiscal 2025 Results For the six months ended March 31, 2025, revenue declined to $55.2 million from $74.3 million year-over-year, with the company swinging from a net income of $8.4 million in the prior year period to a net loss of ($1.4) million, reflecting significant challenges faced during the first half of the fiscal year Six-Month FY2025 vs FY2024 Financial Highlights | Metric | Six Months FY2025 | Six Months FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $55.2 million | $74.3 million | -25.7% | | Net Income (Loss) | ($1.4) million | $8.4 million | Swing to Loss | | Diluted EPS | ($0.11) | $0.62 | Swing to Loss | Management Commentary Management acknowledged a volatile quarter with segment-specific challenges but expressed optimism for future growth, supported by strategic initiatives and a strong financial position Q2 Performance and Market Outlook Management highlighted a volatile second quarter, with record performance in the Smart Water segment offset by significant challenges in the Energy Solutions and Intelligent Industrial segments, as external factors such as global trade concerns, tariffs, and decreasing oil prices have delayed or canceled customer projects, prompting the company to actively optimize its supply chains to mitigate these impacts - The Smart Water segment, particularly Hydroconn® connectors, achieved record performance[4] - The Energy Solutions segment is facing uncertainty due to global trade concerns, tariffs, and lower oil prices, leading to project delays and cancellations[4] - The Intelligent Industrial segment was negatively affected by tariff concerns, specifically for its EXILE products[4] Future Outlook and Strategy Despite recent challenges, management expressed optimism for the future based on record first-half revenue for Hydroconn connectors, a new Mariner contract, ongoing PRM studies, and a strong backlog, while maintaining a robust balance sheet with no debt and pursuing growth through acquisitions and cost management to return to sustained profitability - Future optimism is fueled by record Hydroconn revenue, a new Mariner contract, ongoing PRM studies, and a strong backlog for the second half of the year[5] - The company maintains a strong balance sheet with no debt and $19.8 million in cash and short-term investments[5] - The company's strategy includes managing workforce and development costs, and pursuing growth through immediately accretive acquisitions[5] Segment Performance Analysis Segment performance varied significantly, with record growth in Smart Water offset by substantial revenue declines in Energy Solutions and Intelligent Industrial segments Smart Water Segment The Smart Water segment was a standout performer, achieving record revenue for both the second quarter and the first half of the fiscal year, with revenue growing 47.8% year-over-year for the quarter, driven by strong sales of Hydroconn® universal AMI connectors, which have now surpassed 27 million units sold, and confirmed compliance with the Build America, Buy America Act (BABA) to support sales Smart Water Segment Revenue | Period | FY2025 | FY2024 | Growth | | :--- | :--- | :--- | :--- | | Q2 Revenue | $9.5 million | $6.4 million | +47.8% | | Six-Month Revenue | $16.8 million | $10.6 million | +58.5% | - The company surpassed 27 million Hydroconn® universal AMI connectors sold, indicating strong market adoption[6] - Hydroconn connectors were confirmed to be compliant with the Build America, Buy America Act (BABA), which is often required for projects using federal funds[6] Energy Solutions Segment The Energy Solutions segment experienced a sharp decline in revenue, falling 76.5% in the second quarter compared to the prior year, primarily due to lower utilization of the marine ocean bottom node rental fleet and a $2.2 million reversal of rental revenue due to concerns about a customer's ability to pay, though the company sees future potential from its Pioneer land seismic product and is engaged in two FEED studies for a major oil producer Energy Solutions Segment Revenue | Period | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Q2 Revenue | $2.6 million | $11.0 million | -76.5% | | Six-Month Revenue | $26.9 million | $50.9 million | -47.3% | - The revenue decrease was driven by lower marine node rental utilization and a $2.2 million reversal of rental revenue due to collectability concerns[7] - The company is performing engineering services for two Front-End Engineering and Design (FEED) studies and is actively marketing its Pioneer product[7] Intelligent Industrial Segment Revenue for the Intelligent Industrial segment decreased by 12.8% in the second quarter, mainly attributed to the completion of a government contract in fiscal 2024 and lower demand for imaging products, partially offset by an increase in demand for the company's sensor products Intelligent Industrial Segment Revenue | Period | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Q2 Revenue | $5.9 million | $6.7 million | -12.8% | | Six-Month Revenue | $11.5 million | $12.6 million | -8.8% | - The revenue decrease was primarily due to the completion of a government contract in the prior fiscal year and lower demand for imaging products[8] Financial Position and Liquidity The company maintains a strong liquidity position with substantial cash reserves and no debt, despite negative operating cash flow offset by investing activities Balance Sheet and Liquidity As of March 31, 2025, Geospace maintained a strong and liquid balance sheet, holding $19.8 million in cash and short-term investments, with no outstanding borrowings, and access to an additional $14.9 million under its credit agreement, while working capital stood at $71.4 million Key Balance Sheet and Liquidity Metrics (as of March 31, 2025) | Metric | Value | | :--- | :--- | | Cash and Short-Term Investments | $19.8 million | | Borrowings Outstanding | $0 | | Bank Credit Availability | $14.9 million | | Working Capital | $71.4 million | - The company owns unencumbered property and real estate, with a sale of excess land adjacent to its Houston facility expected to be completed in the third quarter[10] Cash Flow For the six-month period ended March 31, 2025, the company used $13.4 million in cash from operating activities, while cash from investing activities was a positive $15.5 million, largely due to $18.9 million in proceeds from the sale of short-term investments, which offset capital expenditures Six-Month Cash Flow Summary (ended March 31, 2025) | Activity | Cash Flow | | :--- | :--- | | Net Cash Used in Operating Activities | ($13.4) million | | Net Cash Provided by Investing Activities | $15.5 million | | Net Cash Used in Financing Activities | ($0.6) million | Consolidated Financial Statements This section provides the detailed, unaudited consolidated financial statements for Geospace Technologies Corporation, including the Statements of Operations, Balance Sheets, Statements of Cash Flows, and a summary of segment revenue and operating income (loss) for the periods ended March 31, 2025, and March 31, 2024 Consolidated Statements of Operations The company reported a net loss of ($9.8) million for the three months and ($1.4) million for the six months ended March 31, 2025, a significant downturn from the net loss of ($4.3) million and net income of $8.4 million in the respective prior-year periods, with the decline driven by lower revenues, particularly from rentals, and increased operating expenses Consolidated Statements of Operations (in thousands) | | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $18,023 | $24,270 | $55,246 | $74,302 | | Gross profit | $1,748 | $5,881 | $21,897 | $28,117 | | Income (loss) from operations | $(10,281) | $(4,506) | $(2,446) | $8,331 | | Net income (loss) | $(9,798) | $(4,327) | $(1,422) | $8,352 | | Diluted EPS | $(0.77) | $(0.32) | $(0.11) | $0.62 | Consolidated Balance Sheets As of March 31, 2025, total assets were $149.0 million, a slight decrease from $152.2 million at September 30, 2024, primarily due to a reduction in short-term investments, while total liabilities also decreased to $15.9 million from $17.6 million, and total stockholders' equity saw a small reduction to $133.1 million Consolidated Balance Sheets (in thousands) | | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total current assets | $87,013 | $89,366 | | Total assets | $148,964 | $152,194 | | Total current liabilities | $15,570 | $17,197 | | Total liabilities | $15,872 | $17,570 | | Total stockholders' equity | $133,092 | $134,624 | Consolidated Statements of Cash Flows For the six months ended March 31, 2025, net cash used in operating activities was ($13.4) million, while net cash provided by investing activities was $15.5 million, mainly from the sale of short-term investments, resulting in a net increase in cash and cash equivalents of $1.4 million after a small use of cash in financing activities Consolidated Statements of Cash Flows (in thousands) | | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,401) | $(6,271) | | Net cash provided by investing activities | $15,454 | $8,096 | | Net cash used in financing activities | $(615) | $— | | Increase in cash and cash equivalents | $1,399 | $1,959 | | Cash and cash equivalents, end of period | $8,294 | $20,762 | Summary of Segment Revenue and Operating Income (Loss) The segment summary highlights the contrasting performance across business units, with the Smart Water segment generating $1.8 million in operating income for the six months ended March 31, 2025, while the Energy Solutions segment's operating income fell sharply to $6.6 million from $13.1 million YoY, and the Intelligent Industrial segment posted a wider operating loss of ($2.2) million Six Months Ended March 31, 2025 vs 2024 (in thousands) | Segment | Revenue 2025 | Revenue 2024 | Operating Income (Loss) 2025 | Operating Income (Loss) 2024 | | :--- | :--- | :--- | :--- | :--- | | Smart Water | $16,760 | $10,645 | $1,790 | $2,761 | | Energy Solutions | $26,870 | $50,946 | $6,614 | $13,120 | | Intelligent Industrial | $11,460 | $12,562 | $(2,227) | $(899) |