Geospace Technologies (GEOS) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Q1 FY2024 financial statements show significant improvements in assets, revenue, and net income, with positive operating cash flow Consolidated Balance Sheets Total assets increased to $167.4 million by December 31, 2023, primarily due to higher receivables, boosting stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 (in thousands) | Sep 30, 2023 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $99,993 | $75,778 | | Trade accounts and note receivable, net | $41,969 | $21,373 | | Cash and cash equivalents | $18,907 | $18,803 | | Total Assets | $167,383 | $153,042 | | Total Liabilities | $21,076 | $20,326 | | Total Stockholders' Equity | $146,307 | $132,716 | Consolidated Statements of Operations Total revenue surged to $50.0 million in Q1 FY2024, a 60.8% increase, leading to a net income of $12.7 million from a prior-year net loss Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 FY2024 (ended Dec 31, 2023) (in thousands) | Q1 FY2023 (ended Dec 31, 2022) (in thousands) | | :--- | :--- | :--- | | Total Revenue | $50,032 | $31,109 | | Gross Profit | $22,236 | $10,534 | | Income (loss) from operations | $12,837 | $(279) | | Net Income (loss) | $12,679 | $(97) | | Diluted EPS | $0.94 | $(0.01) | - Product revenue more than doubled to $43.7 million from $19.5 million year-over-year, while rental revenue decreased to $6.3 million from $11.6 million[11] Consolidated Statements of Cash Flows Net cash provided by operating activities was $2.7 million in Q1 FY2024, a significant improvement, with cash ending at $18.9 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2023 (in thousands) | Three Months Ended Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $2,652 | $(4,864) | | Net cash provided by (used in) investing activities | $(2,740) | $242 | | Net cash used in financing activities | $0 | $(175) | | Increase (decrease) in cash | $104 | $(4,754) | | Cash and cash equivalents, end of period | $18,907 | $11,355 | Notes to Consolidated Financial Statements Notes detail accounting policies, segment performance, and risk factors, highlighting significant Oil and Gas Markets revenue and concentrated customer credit risk - The Oil and Gas Markets segment generated $39.9 million in revenue, while the Adjacent Markets segment contributed $9.8 million for the quarter ended December 31, 2023[64] - As of December 31, 2023, two customers represented a significant concentration of credit risk, with combined trade accounts and notes receivable of $33.6 million and $2.4 million, respectively[66] - The company's Russian subsidiary (GTE) had a net carrying value of $5.7 million, including $1.8 million in cash that may be difficult to repatriate due to government restrictions[72] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 60.8% revenue increase to a $30.0 million Mariner™ node sale, while maintaining strong liquidity and addressing industry and geopolitical risks Consolidated Results of Operations Consolidated revenue for Q1 FY2024 increased 60.8% to $50.0 million due to a $30.0 million Mariner™ node sale, boosting gross profit and reducing operating expenses - Consolidated revenue for the three months ended December 31, 2023, increased by $18.9 million (60.8%) year-over-year, largely due to a $30.0 million sale of Mariner™ shallow water ocean bottom nodes[108] - The company does not expect the significant increase in revenue seen in Q1 to continue for the remaining three quarters of fiscal year 2024[108] - Consolidated operating expenses decreased by $1.4 million (13.1%) YoY, mainly due to lower personnel costs from a prior-year workforce reduction and reduced R&D expenditures[110] Segment Results of Operations Oil and Gas Markets revenue surged 98.1% to $39.9 million due to a major product sale, while Adjacent Markets revenue declined, and Emerging Markets' loss narrowed Segment Revenue and Operating Income (in thousands) | Segment | Revenue Q1 FY24 (in thousands) | Revenue Q1 FY23 (in thousands) | Operating Income (Loss) Q1 FY24 (in thousands) | Operating Income (Loss) Q1 FY23 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Oil and Gas Markets | $39,909 | $20,148 | $14,563 | $2,406 | | Adjacent Markets | $9,815 | $10,822 | $2,034 | $1,747 | | Emerging Markets | $234 | $93 | $(625) | $(1,213) | - Oil and Gas Markets' wireless exploration product revenue increased by 120.9% YoY, driven by a $30.0 million sale of Mariner™ nodes, which replaced a rental contract[113] - Adjacent Markets' industrial product revenue decreased by 18.8% due to lower demand for water meter and industrial sensor products[116] Liquidity and Capital Resources The company maintains a strong liquidity position with $34.0 million in cash and investments, supported by positive operating cash flow and available credit - At December 31, 2023, the company had $34.0 million in cash and cash equivalents and short-term investments[119] - The company has a revolving credit facility with $15 million maximum availability, with no outstanding borrowings and $14.9 million of availability as of December 31, 2023[123][124] - The company expects to receive payment on a $28.7 million receivable related to the Mariner™ sale in the second quarter of fiscal year 2024[126] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is exempt from detailed market risk disclosures under Regulation S-K - As a smaller reporting company, Geospace Technologies is exempt from providing the market risk disclosures typically required under this item[133] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of December 31, 2023, with no material changes to internal controls - Based on an evaluation as of December 31, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[135] - No changes in internal control over financial reporting occurred during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[136] PART II. OTHER INFORMATION Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial data in Inline XBRL format - The exhibits filed with the report include CEO and CFO certifications pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350[138][140] - Financial statements and notes are provided in Inline Extensible Business Reporting Language (iXBRL) format[140]