Geospace Technologies (GEOS) - 2025 Q3 - Quarterly Results

Earnings Release Overview Financial Highlights (Q3 and 9-month) Geospace Technologies achieved Q3 2025 profitability with $0.8 million net income, but reported a nine-month net loss of ($0.7) million due to decreased revenue Key Financial Highlights | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $24.8 million | $25.8 million | $80.1 million | $100.2 million | | Net Income (Loss) | $0.8 million | ($2.1) million | ($0.7) million | $6.3 million | | Diluted EPS | $0.06 | $(0.16) | $(0.05) | $0.47 | - The company achieved profitability in Q3 2025, reversing a net loss from the prior year, despite a slight decrease in quarterly revenue[2] - For the nine-month period, the company reported a net loss, a decline from net income in the previous year, alongside a notable reduction in total revenue[3] Management's Strategic Review CEO Richard Kelley highlighted Q3 2025 strategic wins: OptoSeis® PRM contract, Pioneer™ land node first sale, and Heartbeat Detector® acquisition - Strategic Accomplishments in Q3 2025: * Energy Solutions: Secured a substantial contract to supply nearly 500km of the OptoSeis® Permanent Reservoir Monitoring (PRM) system for the Mero field off Brazil * Energy Solutions: Achieved the first sale of the new ultralight land node, Pioneer™, to a global engineering firm in Canada, with delivery expected before fiscal year-end * Asset Sale: Completed the sale of assets related to the streamer recovery device product line to Seis Gear, Inc. in June * Intelligent Industrial: Acquired Heartbeat Detector®, a security technology from ORNL, with plans to offer it on a subscription basis to grow recurring revenue * Security & Defense Focus: Engaged former U.S. Border Patrol Chief Carla Provost to promote advanced analytics and sensing solutions for border and perimeter security * Smart Water: Continued strong organic growth, with Hydroconn® universal AMI connectors remaining a reliable revenue and profit center * Property Sale: Completed the sale of idle property adjacent to the facility for $9.2 million in gross proceeds[4][5][6][7] Segmental Performance Analysis Smart Water Segment The Smart Water segment achieved robust growth, with Q3 revenue up 6.1% and nine-month revenue up 32.7%, setting a new record Smart Water Segment Revenue | Period | June 30, 2025 Revenue ($M) | June 30, 2024 Revenue ($M) | YoY Change (%) | | :----- | :------------------------- | :------------------------- | :------------- | | Q3 | 10.5 | 9.9 | +6.1% | | 9-month| 27.3 | 20.558 | +32.7% | - The segment achieved a record high level of nine-month revenue, driven by the reliability of Hydroconn® universal AMI connectors and positive market reception to new branding[6][7] Energy Solutions Segment Energy Solutions revenue declined 13.6% in Q3 and 42.0% for nine months, primarily from lower marine node utilization, offset by Pioneer™'s first sale Energy Solutions Segment Revenue | Period | June 30, 2025 Revenue ($M) | June 30, 2024 Revenue ($M) | YoY Change (%) | | :----- | :------------------------- | :------------------------- | :------------- | | Q3 | 8.1 | 9.4 | -13.6% | | 9-month| 35.0 | 60.328 | -42.0% | - The decrease in revenue for both periods was attributed to lower utilization and sales for the marine ocean bottom node rental fleet[8] - The first sale of the new Pioneer™ ultralight land node is encouraging, signaling demand for lighter, faster deployment solutions in geophysical surveys[8] Intelligent Industrial Segment Intelligent Industrial revenue decreased 5.4% in Q3 and 7.6% for nine months, due to a completed government contract and lower imaging demand Intelligent Industrial Segment Revenue | Period | June 30, 2025 Revenue ($M) | June 30, 2024 Revenue ($M) | YoY Change (%) | | :----- | :------------------------- | :------------------------- | :------------- | | Q3 | 6.1 | 6.5 | -5.4% | | 9-month| 17.6 | 19.1 | -7.6% | - Revenue decrease was primarily due to the completion of a government contract in Q4 FY2024 and lower demand for imaging products[9] - The decline was partially mitigated by an increase in demand for contract manufacturing services[9] Financial Position and Cash Flows Balance Sheet and Liquidity Geospace Technologies reported strong liquidity as of June 30, 2025, with $25.6 million in cash and $15.0 million available borrowing capacity Key Liquidity Metrics (as of June 30, 2025) | Metric | Amount ($M) | | :------------------------------- | :---------- | | Cash and short-term investments | 25.6 | | Working capital | 74.5 | | Trade accounts and financing receivables | 32.3 | | Additional borrowing availability| 15.0 | - The company has no outstanding borrowings under its bank credit agreement and owns unencumbered property and real estate, enhancing its financial flexibility[11] Cash Flow Activities For nine months ended June 30, 2025, operating activities used $18.1 million cash, while investing activities generated $35.4 million Cash Flow Summary (Nine Months Ended June 30, 2025) | Activity | Cash Flow ($M) | | :----------------------- | :------------- | | Net cash used in operating activities | (18.1) | | Net cash provided by investing activities | 35.4 | - Investing activities generated significant cash, including $28.4 million from short-term investments, $8.7 million from property sales, and $5.1 million from rental equipment sales, partially offset by capital expenditures[10] Detailed Financial Statements Consolidated Statements of Operations This section details revenues, costs, operating expenses, and net income (loss) for Q3 and nine months ended June 30, 2025, versus prior periods Consolidated Statements of Operations (in thousands, except share and per share amounts) | | Three Months Ended | | Nine Months Ended | | :--- | :--- | :--- | :--- | :--- | | | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | | Revenue: | | | | | | Products | $23,227 | $20,223 | $74,580 | $83,434 | | Rental | $1,616 | $5,635 | $5,509 | $16,726 | | Total revenue | $24,843 | $25,858 | $80,089 | $100,160 | | Cost of revenue: | | | | | | Products | $15,150 | $14,179 | $43,166 | $53,016 | | Rental | $2,154 | $3,153 | $7,487 | $10,501 | | Total cost of revenue | $17,304 | $17,332 | $50,653 | $63,517 | | Gross profit | $7,539 | $8,526 | $29,436 | $36,643 | | Operating expenses: | | | | | | Selling, general and administrative | $7,546 | $6,941 | $21,741 | $19,313 | | Research and development | $4,238 | $4,011 | $14,367 | $11,476 | | Provision for (recovery of) credit losses | $2 | $(33) | $21 | $(84) | | Total operating expenses | $11,786 | $10,919 | $36,129 | $30,705 | | Gain on disposal of property | $4,616 | — | $4,616 | — | | Income (loss) from operations | $369 | $(2,393) | $(2,077) | $5,938 | | Other income (expense): | | | | | | Interest expense | $(44) | $(44) | $(131) | $(144) | | Interest income | $537 | $472 | $1,975 | $954 | | Foreign currency transaction gains (losses), net | $4 | $(70) | $(265) | $(253) | | Other, net | $(38) | $(37) | $(109) | $(104) | | Total other income, net | $459 | $321 | $1,470 | $453 | | Income (loss) before income taxes | $828 | $(2,072) | $(607) | $6,391 | | Income tax expense (benefit) | $68 | $(2) | $55 | $109 | | Net income (loss) | $760 | $(2,070) | $(662) | $6,282 | | Income (loss) per common share: | | | | | | Basic | $0.06 | $(0.16) | $(0.05) | $0.47 | | Diluted | $0.06 | $(0.16) | $(0.05) | $0.47 | | Weighted average common shares outstanding: | | | | | | Basic | 12,805,414 | 13,216,386 | 12,783,832 | 13,270,444 | | Diluted | 12,805,414 | 13,216,386 | 12,783,832 | 13,431,714 | Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and stockholders' equity, as of June 30, 2025, versus September 30, 2024 Consolidated Balance Sheets (in thousands except share amounts) | ASSETS | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Current assets: | | | | Cash and cash equivalents | $23,559 | $6,895 | | Short-term investments | $1,997 | $30,227 | | Trade accounts and financing receivables, net | $32,308 | $21,868 | | Inventories, net | $29,232 | $26,222 | | Assets held for sale | — | $1,841 | | Prepaid expenses and other current assets | $3,031 | $2,313 | | Total current assets | $90,127 | $89,366 | | Non-current inventories, net | $18,860 | $18,031 | | Rental equipment, net | $10,321 | $14,186 | | Property, plant and equipment, net | $22,189 | $21,083 | | Non-current trade accounts and financing receivables | $5,570 | $6,375 | | Operating right-of-use assets | $334 | $464 | | Goodwill | $736 | $736 | | Other intangible assets, net | $1,537 | $1,649 | | Other non-current assets | $158 | $304 | | Total assets | $149,832 | $152,194 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Current liabilities: | | | | Accounts payable trade | $3,771 | $8,003 | | Operating lease liabilities | $119 | $173 | | Other current liabilities | $11,383 | $9,021 | | Total current liabilities | $15,273 | $17,197 | | Non-current operating lease liabilities | $249 | $339 | | Deferred tax liabilities, net | $19 | $34 | | Total liabilities | $15,541 | $17,570 | | 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; 14,365,212 and 14,206,082 shares issued, respectively; and 12,806,952 and 12,709,381 shares outstanding, respectively | $144 | $142 | | Additional paid-in capital | $98,540 | $97,342 | | Retained earnings | $54,620 | $55,282 | | Accumulated other comprehensive loss | $(4,513) | $(4,257) | | Treasury stock, at cost, 1,558,260 and 1,496,701 shares, respectively | $(14,500) | $(13,885) | | Total stockholders' equity | $134,291 | $134,624 | | Total liabilities and stockholders' equity | $149,832 | $152,194 | Consolidated Statements of Cash Flows This section details cash flows from operating, investing, and financing activities for the nine months ended June 30, 2025, versus the prior year Consolidated Statements of Cash Flows (in thousands) | | Nine Months Ended | | :--- | :--- | :--- | | | June 30, 2025 | June 30, 2024 | | Cash flows from operating activities: | | | | Net income (loss) | $(662) | $6,282 | | Adjustments to reconcile net income (loss) to net cash used in operating activities: | | | | Deferred income tax expense (benefit) | $(16) | $10 | | Rental equipment depreciation | $4,830 | $8,534 | | Property, plant and equipment depreciation | $2,716 | $2,595 | | Amortization of intangible assets | $112 | $300 | | Accretion of discounts on short-term investments | $(169) | $(415) | | Stock-based compensation expense | $1,200 | $1,029 | | Provision for (recovery of) credit losses | $21 | $(84) | | Inventory obsolescence expense | $1,100 | $144 | | Gross profit from sale of rental equipment | $(16,297) | $(20,751) | | (Gain) loss on disposal of property, plant and equipment | $(4,708) | $11 | | Realized gain on investments | $(9) | — | | Effects of changes in operating assets and liabilities: | | | | Trade accounts and financing receivables | $2,229 | $5,162 | | Inventories | $(5,617) | $(5,787) | | Other assets | $(591) | $(176) | | Accounts payable trade | $(4,232) | $(1,408) | | Other liabilities | $1,968 | $(2,973) | | Net cash used in operating activities | $(18,125) | $(7,527) | | Cash flows from investing activities: | | | | Purchase of property, plant and equipment | $(5,841) | $(3,577) | | Proceeds from the sale of property, plant and equipment | $8,663 | $2 | | Investment in rental equipment | $(1,083) | $(8,181) | | Proceeds from the sale of rental equipment | $5,122 | $30,948 | | Purchases of short-term investments | — | $(24,033) | | Proceeds from the sale of short-term investments | $28,408 | $8,750 | | Payments received on note receivable related to sale of subsidiary | $137 | — | | Net cash provided by investing activities | $35,406 | $3,909 | | Cash flows from financing activities: | | | | Purchase of treasury stock | $(615) | $(2,999) | | Net cash used in financing activities | $(615) | $(2,999) | | Effect of exchange rate changes on cash | $(2) | $141 | | Increase (decrease) in cash and cash equivalents | $16,664 | $(6,476) | | Cash and cash equivalents, beginning of period | $6,895 | $18,803 | | Cash and cash equivalents, end of period | $23,559 | $12,327 | | SUPPLEMENTAL CASH FLOW INFORMATION: | | | | Cash paid for income taxes | $122 | $185 | | Accounts and financing receivables related to sale of rental equipment | $11,975 | — | | Inventory transferred to rental equipment | $2,498 | $5,765 | Segment Revenue and Operating Income (Loss) Segmental revenue and operating income (loss) are presented for Smart Water, Energy Solutions, Intelligent Industrial, and Corporate for Q3 and nine months Summary of Segment Revenue and Operating Income (Loss) (in thousands) | | Three Months Ended | | Nine Months Ended | | :--- | :--- | :--- | :--- | :--- | | | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | | Revenue: | | | | | | Smart Water | $10,518 | $9,913 | $27,278 | $20,558 | | Energy Solutions | $8,107 | $9,382 | $34,977 | $60,328 | | Intelligent Industrial | $6,136 | $6,489 | $17,596 | $19,051 | | Corporate | $82 | $74 | $238 | $223 | | Total | $24,843 | $25,858 | $80,089 | $100,160 | | Income (loss) from operations: | | | | | | Smart Water | $2,233 | $2,611 | $4,023 | $5,372 | | Energy Solutions | $(1,234) | $(117) | $5,380 | $13,003 | | Intelligent Industrial | $(1,041) | $(1,282) | $(3,268) | $(2,181) | | Corporate | $411 | $(3,605) | $(8,212) | $(10,256) | | Total | $369 | $(2,393) | $(2,077) | $5,938 | Additional Information About Geospace Technologies Geospace Technologies is a global manufacturer of advanced sensing, IoT, and ruggedized products for diverse markets including smart water and energy - Geospace Technologies is a global technology and instrumentation manufacturer specializing in advanced sensing, IoT, and highly ruggedized products[13] - The company serves smart water, energy exploration, industrial, government, and commercial customers worldwide, with products designed to optimize energy exploration, enhance national/homeland security, empower water utility/property managers, and streamline electronic printing solutions[13] - With over four decades of excellence and more than 450 employees, Geospace is traded on NASDAQ under the ticker symbol GEOS[13] Conference Call Details Geospace Technologies will host a conference call on August 8, 2025, to discuss Q1 FY2025 financial results, with replay available - Conference Call Date and Time: August 8, 2025, at 10:00 a.m. Eastern Time (9 a.m. Central)[12] - Access Details: Participants can call (800)274-8461 (US) or (203)518-9814 (International), using conference ID GEOSQ325[12] - Replay Availability: A replay will be accessible for approximately 60 days via the Investor Relations tab on **www.geospace.com**[12](index=12&type=chunk) Forward-Looking Statements This section provides a cautionary note on forward-looking statements, defining terminology and directing readers to Form 10-K for associated risks - Forward-looking statements are identified by terms such as 'may', 'will', 'intend', 'expect', 'plan', 'budget', 'forecast', 'anticipate', 'believe', 'estimate', 'predict', 'potential', 'continue', 'evaluating' or similar words[15] - Examples include statements regarding expected operating results, success of product rollouts (e.g., Aquana smart water valves, Quantum security solutions), future demand for products and rental equipment, completion of new orders, and the impact of external factors like oil prices or geopolitical conflicts[15] - Readers are advised to review 'Risk Factors' in the most recent Annual Report on Form 10-K and other periodic reports for risks and uncertainties that may cause actual results to differ materially from expectations, such as technology failure, commodity price decreases, lack of market acceptance, and intellectual property issues[15]