Financial Data and Key Metrics Changes - For the first quarter of fiscal year 2026, the company reported revenue of $25.6 million, a decrease from $37.2 million in the same period last year, representing a decline of 31.5% [4][11] - The net loss for the quarter was $9.8 million, or $0.76 per diluted share, compared to a net income of $8.4 million, or $0.65 per diluted share in the prior year [4][11] - The company had $10 million in cash and cash equivalents and working capital of $52.2 million as of December 31, 2025 [14] Business Line Data and Key Metrics Changes - The Smart Water segment generated $5.8 million in revenue, down 21% from $7.3 million year-over-year, primarily due to lower demand for Hydroconn cable and connector products [11][12] - The Energy Solutions segment revenue was $14.6 million, a decrease of 40% from $24.3 million in the previous year, influenced by lower utilization of the OBX rental fleet and a significant prior year sale of $17 million [12] - The Intelligent Industrial segment reported $5.1 million in revenue, an 8% decrease from $5.6 million, attributed to lower demand for industrial sensor products, partially offset by increased demand for contract manufacturing services [13] Market Data and Key Metrics Changes - The Smart Water segment operates in a stable yet increasingly demanding environment, driven by factors such as population growth and aging infrastructure [5][6] - The Energy Solutions segment faces ongoing volatility due to geopolitical events and inflationary pressures, but global energy demand remains resilient [7][8] - The Intelligent Industrial segment continues to generate steady revenue, bolstered by the acquisition of Geovox Security and the introduction of a subscription model [9] Company Strategy and Development Direction - The company is focused on long-term growth through prudent planning, operational discipline, and strategic investments in innovative technology [5][10] - There is an emphasis on expanding geographic reach in sales and marketing operations to address demand in critical areas [6] - The company aims to maintain a conservative financial framework while evaluating opportunities carefully and avoiding speculative investments [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by economic uncertainty, inflation, and supply chain issues but expressed confidence in the company's ability to navigate these challenges [5][10] - The long-term fundamentals of the industry remain intact, with a focus on adaptability and operational excellence [8][10] - The company anticipates continued uncertainty in global markets but believes it is well-positioned due to the quality of its portfolio and workforce [10] Other Important Information - The company plans a capital expenditure budget of $5 million for fiscal year 2026, with no additions to the rental fleet expected due to current market conditions [15] Q&A Session Summary Question: Strategic importance of the Heartbeat installed base and renewal expectations - Management indicated that there is interest in replacing aging equipment with a new subscription model, but specific numbers on potential revenue from full replacement were not available [20] Question: Bid on Homeland Security's RFP for surveillance detection system - Management confirmed that they did not receive a direct award for the RFP as the administration opted for direct awards where applicable [22][23] Question: Timeline for Petrobras contract deployment and revenue recognition - Revenue recognition for the Petrobras contract is expected to begin in Q3, with the goods portion anticipated to be completed in Q1 of 2027 [24][26] Question: Update on Geovox deployments and pipeline - Management stated that they have started shipping units and anticipate a couple of hundred units this year, with significant interest in the product [39] Question: Prospects for rental fleet activity levels - Management noted that while there have been increased requests for quotations, no actual orders have been placed yet [45]

Core Viewpoint - Geospace Technologies Corporation (GEOS) has experienced significant stock declines following its earnings report, with a 38.7% drop since the end of September 2025, contrasting with a modest gain in the S&P 500 Index [1] Financial Performance - For the fourth quarter of fiscal 2025, Geospace reported revenues of $30.7 million, a decrease of 13.3% from $35.4 million in the same quarter last year [2] - The company recorded a net loss of $9.1 million, or $(0.71) per share, an improvement from a $12.9 million loss, or $(1.00) per share, in the prior-year quarter [2] - Gross profit fell 78.3% to $3.5 million from $15.9 million due to rising product costs and a shift in segment mix [2] Segment Performance - Smart Water revenue decreased by 28.1% to $8.5 million from $11.9 million year over year [3] - Energy Solutions revenue declined 10.9% to $15.7 million from $17.6 million [3] - Intelligent Industrial revenue increased by 8.9% to $6.4 million from $5.8 million [3] Annual Overview - Total revenue for fiscal 2025 was $110.8 million, down 18.3% from $135.6 million in fiscal 2024 [4] - The net loss widened to $9.7 million, or $(0.76) per share, compared to a $6.6 million loss, or $(0.50) per share, a year earlier [4] - Gross profit for the full fiscal year declined 37.4% to $32.9 million from $52.6 million [4] Operational Metrics - Segment profitability weakened, with Energy Solutions reporting an operating loss of $4.9 million compared to an operating income of $5.6 million in the prior-year quarter [5] - Smart Water's operating income fell 57.3% to $1.6 million from $3.8 million [5] - Intelligent Industrial's operating loss narrowed to $1.1 million from $4.5 million [5] Cash Flow and Financial Position - Cash and equivalents at the end of fiscal 2025 were $26.3 million, up from $6.9 million a year earlier [6] - Net cash used in operating activities was $22.2 million for fiscal 2025, compared to $9.1 million in fiscal 2024 [6] - The company reported $64.1 million of working capital and $8 million of undrawn credit availability at year-end [6] Management Insights - Management highlighted ongoing strategic diversification efforts, particularly in the Smart Water segment, which has shown consistent revenue growth [7] - The Energy Solutions segment faces challenges due to reduced offshore exploration and low oil prices, but secured a significant contract with Petrobras [7] - The Intelligent Industrial segment remains stable, supported by demand for industrial sensors and contract manufacturing [8] Challenges and Influences - Cost pressures significantly impacted quarterly performance, with higher product costs attributed to U.S. trade tariffs [9] - Lower utilization of the rental fleet led to a 61.6% drop in rental revenue, falling to $1.1 million from $2.8 million [10] - Delays related to government shutdowns disrupted project timelines, affecting near-term revenue potential [10] Future Outlook - Management did not provide specific revenue or earnings guidance for fiscal 2026 but expressed confidence in backlog strength and anticipated margin improvements [11] - Revenue recognition for the Petrobras PRM contract is expected to begin in the second quarter of fiscal 2026, potentially boosting future revenues [11] Recent Developments - Geospace acquired Geovox Security, enhancing its security offerings with the Heartbeat Detector product line [12] - The company also restructured its Exile product portfolio to improve revenue and margins [12] - No additional acquisitions or restructuring initiatives were disclosed for the quarter [13]