Geospace Technologies (GEOS) - 2024 Q2 - Quarterly Results

Financial Highlights & Management Commentary Second Quarter & Six-Month Fiscal 2024 Results Geospace Technologies reported a net loss in Q2 FY2024 with revenue declining to $24.3 million, yet the six-month period showed strong growth to $74.3 million revenue and $8.4 million net income, driven by a significant Q1 equipment sale Q2 FY2024 Financial Performance (Three Months Ended Mar 31, 2024) | Metric | Q2 FY2024 | Q2 FY2023 | | :--- | :--- | :--- | | Revenue | $24.3 million | $31.4 million | | Net Income (Loss) | ($4.3 million) | $4.6 million | | Diluted EPS | ($0.32) | $0.35 | Six-Month FY2024 Financial Performance (Ended Mar 31, 2024) | Metric | Six Months FY2024 | Six Months FY2023 | | :--- | :--- | :--- | | Revenue | $74.3 million | $62.5 million | | Net Income | $8.4 million | $4.5 million | | Diluted EPS | $0.62 | $0.35 | Management's Comments Management highlighted that despite a second-quarter net loss due to low utilization of its OBX and Mariner ocean bottom nodes, the company remains on track for full-year profitability, supported by a strong first six months - The Q2 net loss of $4.3 million was primarily caused by low utilization of OBX and Mariner ocean bottom nodes, partly because a rental contract was converted into a $30 million sale in Q1[5] - The company maintains a strong balance sheet with no debt and $51.2 million in cash and short-term investments as of March 31, 2024[5] - The Adjacent Markets segment had its third-best quarterly performance, generating $12.2 million in revenue, reinforcing the strategy to create a stable revenue source[6] - The Emerging Markets segment contributed $1.1 million in Q2 revenue, largely from a DARPA contract, with ongoing discussions for security and energy monitoring projects[7] Segment Performance Analysis Oil and Gas Markets Segment The Oil and Gas Markets segment revenue decreased by 41% year-over-year for the second quarter to $10.8 million, due to lower utilization of the marine OBX rental fleet Oil and Gas Markets Segment Revenue | Period | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Three Months | $10.8M | $18.4M | -41% | | Six Months | $50.8M | $38.6M (recalculated) | +32% | - The six-month revenue increase was primarily due to a $30 million sale of Mariner™ shallow water ocean bottom nodes in Q1 FY2024[8] - Management anticipates strong demand and increased utilization of the ocean bottom nodal rental fleet in the second half of fiscal year 2024[8] Adjacent Markets Segment The Adjacent Markets segment reported a slight revenue decrease of 4% to $12.2 million for the second quarter and a 6% decrease to $22.1 million for the six-month period Adjacent Markets Segment Revenue | Period | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Three Months | $12.2M | $12.7M | -4% | | Six Months | $22.1M | $23.5M | -6% | - The revenue decrease was caused by lower demand for water meter and industrial sensor products[9] - The decline was partly offset by higher demand for contract manufacturing services and thermal film products[9] Emerging Markets Segment The Emerging Markets segment generated revenue of $1.1 million in the second quarter and $1.3 million for the six-month period, a significant increase from the prior year Emerging Markets Segment Revenue | Period | FY2024 | FY2023 | Change | | :--- | :--- | :--- | :--- | | Three Months | $1.1M | $0.2M (recalculated) | +483% | | Six Months | $1.3M | $0.3M | +333% | - The revenue increase in both periods is attributed to work performed on a $1.5 million government contract[10] Financial Position and Corporate Developments Balance Sheet and Liquidity As of March 31, 2024, Geospace maintained a strong liquidity position with $51.2 million in cash and short-term investments, no outstanding borrowings, and an available credit line of $11.3 million - The company holds $51.2 million in cash and short-term investments with an additional $11.3 million available under its credit agreement and no outstanding debt[12] - For the six months ended March 31, 2024, net cash used in operating activities was $6.3 million, while net cash provided by investing activities was $8.1 million[11] - Management anticipates a capital expenditure budget of $12 million for fiscal year 2024, including $7 million for additions to its rental equipment[12] Corporate Announcements Geospace announced two significant corporate actions: the appointment of Richard Kelley as Executive Vice President and Chief Operating Officer, and the authorization of a stock repurchase program - On April 29, 2024, Richard Kelley was appointed as Executive Vice President and Chief Operating Officer[13] - The Board of Directors authorized a new stock repurchase program, allowing the company to buy back up to $5 million of its common stock[15] Consolidated Financial Statements Consolidated Statements of Operations For the six months ended March 31, 2024, total revenues were $74.3 million, a significant increase from $62.5 million in the prior-year period Statement of Operations Highlights (Six Months Ended March 31) | Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenue | $74,302 | $62,479 | | Gross Profit | $28,117 | $23,483 | | Income from Operations | $8,331 | $4,098 | | Net Income | $8,352 | $4,540 | Consolidated Balance Sheets As of March 31, 2024, the company's total assets were $157.7 million, up from $153.0 million at September 30, 2023, while total liabilities decreased and stockholders' equity increased Balance Sheet Highlights (in thousands) | Metric | March 31, 2024 | September 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,762 | $18,803 | | Total Current Assets | $92,083 | $75,778 | | Total Assets | $157,698 | $153,042 | | Total Liabilities | $15,504 | $20,326 | | Total Stockholders' Equity | $142,194 | $132,716 | Consolidated Statements of Cash Flows For the six months ended March 31, 2024, net cash used in operating activities was $6.3 million, while investing activities provided $8.1 million, primarily from the sale of rental equipment Cash Flow Highlights (Six Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,271) | $(5,078) | | Net cash provided by investing activities | $8,096 | $12,154 | | Net cash from financing activities | $0 | $(175) | | Increase in cash and cash equivalents | $1,959 | $6,696 | Summary of Segment Revenue and Operating Income For the six months ended March 31, 2024, the Oil and Gas Markets segment was the primary driver of operating income, contributing $11.4 million, with Adjacent Markets also contributing positively Operating Income (Loss) by Segment (Six Months Ended March 31, in thousands) | Segment | 2024 | 2023 | | :--- | :--- | :--- | | Oil and Gas Markets | $11,428 | $6,582 | | Adjacent Markets | $4,830 | $4,802 | | Emerging Markets | $(1,276) | $(2,220) | | Corporate | $(6,651) | $(5,066) | | Total Operating Income | $8,331 | $4,098 |