Geospace Technologies (GEOS) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents unaudited consolidated financial statements, showing decreased assets and a shift to a net loss Consolidated Balance Sheets The balance sheet shows a slight decrease in total assets and a reduction in total liabilities and stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | $23,559 | $6,895 | | Short-term investments | $1,997 | $30,227 | | Total current assets | $90,127 | $89,366 | | Total Assets | $149,832 | $152,194 | | Total Liabilities | $15,541 | $17,570 | | Total Stockholders' Equity | $134,291 | $134,624 | Consolidated Statements of Operations The company's operations shifted from net income to a net loss year-over-year, driven by a significant revenue decline Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | YoY Change | Nine Months 2025 | Nine Months 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $24,843 | $25,858 | -3.9% | $80,089 | $100,160 | -20.0% | | Product Revenue | $23,227 | $20,223 | +14.9% | $74,580 | $83,434 | -10.6% | | Rental Revenue | $1,616 | $5,635 | -71.3% | $5,509 | $16,726 | -67.1% | | Gross Profit | $7,539 | $8,526 | -11.6% | $29,436 | $36,643 | -19.7% | | Income (Loss) from Operations | $369 | ($2,393) | N/A | ($2,077) | $5,938 | N/A | | Net Income (Loss) | $760 | ($2,070) | N/A | ($662) | $6,282 | N/A | | Diluted EPS | $0.06 | ($0.16) | N/A | ($0.05) | $0.47 | N/A | - A gain on disposal of property of $4.6 million in Q3 2025 significantly impacted income from operations, turning it positive for the quarter despite higher operating expenses[12] Consolidated Statements of Cash Flows Cash flow from operations was negative, but investing activities provided a significant cash inflow Consolidated Cash Flow Summary (Nine Months Ended June 30, in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($18,125) | ($7,527) | | Net cash provided by investing activities | $35,406 | $3,909 | | Net cash used in financing activities | ($615) | ($2,999) | | Increase (decrease) in cash | $16,664 | ($6,476) | - Cash from investing activities was primarily driven by $28.4 million in proceeds from the sale of short-term investments and $8.7 million from the sale of property, plant, and equipment[20] Notes to Consolidated Financial Statements Key disclosures include segment restructuring, a property sale, a subsequent acquisition, and credit risk concentration - The company has a significant concentration of credit risk, with two customers in the Energy Solutions segment accounting for receivables of $15.3 million and $9.7 million at June 30, 2025[27] - In June 2025, the company sold a property for a gain of $4.6 million, which is included in income from operations[61] - Effective October 1, 2024, the company restructured its operating segments into Smart Water, Energy Solutions, and Intelligent Industrial, with prior periods recast for comparability[74][75] - On August 1, 2025, the company acquired Geovox Security, Inc for $1.7 million in cash and up to $3.3 million in contingent earn-out payments[79][80] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 20% revenue decrease driven by the Energy Solutions segment, offset by growth in Smart Water Consolidated Results of Operations Consolidated revenue and gross profit declined nearly 20% year-over-year, primarily due to lower Energy Solutions sales Consolidated Revenue and Gross Profit (Nine Months Ended June 30, in millions) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $80.1 | $100.2 | -20.0% | | Gross Profit | $29.4 | $36.6 | -19.7% | - The decrease in nine-month revenue was primarily due to a lower value sale of ocean bottom nodes ($17M in FY2025 vs $30M in FY2024) and reduced marine rental revenue[107] - A gain of $4.6 million from a property sale was recognized in Q3 2025, boosting operating income for the quarter[110] Segment Results of Operations The Smart Water segment grew significantly while the Energy Solutions segment experienced a sharp revenue decline Segment Revenue (Nine Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Smart Water | $27,278 | $20,558 | +32.7% | | Energy Solutions | $34,977 | $60,328 | -42.0% | | Intelligent Industrial | $17,596 | $19,051 | -7.6% | Segment Income (Loss) from Operations (Nine Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Smart Water | $4,023 | $5,372 | ($1,349) | | Energy Solutions | $5,380 | $13,003 | ($7,623) | | Intelligent Industrial | ($3,268) | ($2,181) | ($1,087) | Liquidity and Capital Resources The company maintains a strong debt-free liquidity position despite negative operating cash flow - The company maintains a strong liquidity position with $25.6 million in cash and short-term investments and no outstanding debt[119][125] - Net cash used in operating activities for the nine months was $18.1 million, driven by a net loss and an increase in inventories[119] - The company has a $15 million revolving credit facility that was amended to extend its maturity to August 26, 2025, with negotiations for a long-term extension underway[67][123] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Geospace Technologies is exempt from providing market risk disclosures - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide quantitative and qualitative disclosures about market risk[131] 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 June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[134] - No changes occurred in the company's internal control over financial reporting during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, these controls[135] PART II. OTHER INFORMATION Risk Factors The company faces significant risks from tariffs and trade restrictions due to its international operations and sourcing - The company faces risks from tariffs and trade restrictions due to its significant international sales (approximately half of revenue) and sourcing of raw materials from foreign countries, including China[137] - Escalating trade tensions, particularly between the U.S. and China, could lead to increased manufacturing costs, reduced profit margins, and decreased product competitiveness[137] - Regulatory uncertainty related to changes in the U.S. presidential administration and control of Congress could further impact trade policies and the company's operations[137] Exhibits This section lists filed exhibits, including a credit agreement amendment and required CEO/CFO certifications - The report includes several exhibits, notably the First Amendment to the Credit Agreement dated July 26, 2025, and certifications from the CEO and CFO pursuant to SEC rules[138]