Geospace Technologies (GEOS) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited consolidated financial statements and management's financial analysis Item 1. Financial Statements The unaudited consolidated financial statements show significant financial improvement, transitioning from net loss to net income Consolidated Balance Sheets Total assets increased to $145.7 million by June 30, 2023, driven by higher cash and equity growth Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Total Current Assets | $76,376 | $59,961 | | Total Assets | $145,683 | $135,056 | | Total Current Liabilities | $16,127 | $12,627 | | Total Liabilities | $16,726 | $13,409 | | Total Stockholders' Equity | $128,957 | $121,647 | Consolidated Statements of Operations The company achieved a significant turnaround, reporting net income for Q3 and nine months ended June 30, 2023 Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $32,715 | $20,691 | $95,194 | $63,382 | | Gross Profit | $13,979 | $3,651 | $37,462 | $12,163 | | Income (Loss) from Operations | $3,146 | $(6,534) | $7,244 | $(15,069) | | Net Income (Loss) | $3,228 | $(6,574) | $7,768 | $(14,816) | | Diluted EPS | $0.24 | $(0.51) | $0.59 | $(1.14) | Consolidated Statements of Cash Flows Net cash from operations turned positive, increasing cash and equivalents by $11.2 million by June 30, 2023 Cash Flow Summary for Nine Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $3,128 | $(13,281) | | Net Cash from Investing Activities | $8,326 | $8,678 | | Net Cash from Financing Activities | $(175) | $(1,713) | | Increase (Decrease) in Cash | $11,155 | $(6,598) | | Cash and Cash Equivalents, End of Period | $27,264 | $7,468 | Notes to Consolidated Financial Statements Notes detail accounting policies, segment performance, debt, and risks including customer concentration and geopolitical events - As of June 30, 2023, the company held $2.1 million in cash in its Russian subsidiary, which may be difficult or costly to repatriate due to government-imposed restrictions[24] Segment Revenue (in thousands) - Nine Months Ended June 30 | Segment | 2023 | 2022 | | :--- | :--- | :--- | | Oil and Gas Markets | $56,239 | $34,317 | | Adjacent Markets | $38,392 | $28,312 | | Emerging Markets | $393 | $571 | - The company has significant customer concentration risk, with two customers accounting for receivables of $5.9 million and $4.7 million, and revenues of $25.9 million and $9.3 million, respectively, for the nine months ended June 30, 2023[79] - The net carrying value of the company's Russian subsidiary (GTE) was $6.2 million as of June 30, 2023. The ongoing conflict in Ukraine and related sanctions pose a significant risk to these operations[86] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue and profit growth from increased demand in key segments, supported by strong liquidity Consolidated Results of Operations Consolidated revenue increased by 50.2% to $95.2 million, with gross profit surging 208.0% Year-over-Year Financial Performance Comparison | Metric | Nine Months 2023 | Nine Months 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $95.2M | $63.4M | +50.2% | | Gross Profit | $37.5M | $12.2M | +208.0% | - The increase in revenue was largely due to higher rental revenue from the Oil and Gas Markets segment (increased OBX fleet utilization) and higher demand for industrial products from the Adjacent Markets segment[121] Segment Results of Operations Oil and Gas Markets revenue grew 55.6% due to OBX fleet utilization; Adjacent Markets revenue increased 35.6% - Oil and Gas Markets revenue for the nine months ended June 30, 2023, increased by $21.9 million (55.6%), primarily due to higher utilization of the OBX rental fleet[127] - Adjacent Markets revenue for the nine months ended June 30, 2023, increased by $10.1 million (35.6%), driven by higher demand for water meter products[129][133] - The Emerging Markets segment's operating loss decreased by $0.3 million (9.5%) for the nine-month period, mainly due to lower personnel costs from a workforce reduction[131] Liquidity and Capital Resources Liquidity strengthened with $27.3 million in cash and a new $15 million revolving credit facility - The company had $27.3 million in cash and cash equivalents as of June 30, 2023, with no long-term debt outstanding[134][140] - On July 26, 2023, the company entered into a new credit agreement for a revolving credit facility with a maximum availability of $15 million, expiring in July 2025[139] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, the company is exempt from providing quantitative and qualitative disclosures about market risk[148] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal controls - Based on an evaluation as of June 30, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[150] - No changes occurred during the fiscal quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[151] PART II. OTHER INFORMATION This section includes other required information, such as exhibits filed with the report Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including certifications from the CEO and CFO and financial data - The exhibits filed with this report include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350[153]