Geospace Technologies (GEOS) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q2 2025, the company reported revenue of $18 million, down from $24.3 million in the same period last year, representing a decrease of 26% [11] - The net loss for Q2 2025 was $9.8 million, or $0.77 per diluted share, compared to a net loss of $4.3 million, or $0.32 per diluted share, in the prior year [11] - For the first half of fiscal year 2025, revenue was $55.2 million, down from $74.3 million in the same period last year, marking a decrease of 26% [11] Business Line Data and Key Metrics Changes - The Smart Water segment generated revenue of $9.5 million for Q2 2025, an increase of 48% from $6.4 million in the same period last year [11] - The Energy Solutions segment saw a significant decline, with Q2 revenue of $2.6 million, down 77% from $11 million in the same period last year [12] - The Intelligent Industrial segment reported revenue of $5.9 million for Q2 2025, a decrease of 13% from $6.7 million in the prior year [13] Market Data and Key Metrics Changes - The company is experiencing increased interest in its Quanta product offerings, indicating potential organic growth in this market segment [6] - The ongoing uncertainty in the Energy Solutions segment is attributed to global trade concerns, tariffs, and decreasing oil prices, which have impacted project decisions for customers [7] Company Strategy and Development Direction - The company aims to leverage its innovative IoT technologies and diversify into high-margin markets in the smart water and intelligent industrial segments [9] - The management is focused on strategic cost-cutting and optimizing the supply chain to mitigate external factors affecting the business [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning in newer markets and highlighted a strong backlog going into the second half of the year [10] - The management acknowledged the volatility in the oil and gas market but remains cautiously optimistic about long-term investments from partners and customers [38] Other Important Information - The company maintains a strong balance sheet with no debt and $19.8 million in cash and short-term investments [9] - The company is pursuing growth through acquisitions and accretive additions to its top-line revenue [9] Q&A Session Summary Question: What is the target breakeven level regarding cost-cutting? - Management is focused on strategic cost-cutting and evaluating which business units to invest in going forward [20] Question: Can you elaborate on the Mariner contract and future requirements? - The Mariner contract is with a new customer in the Caspian area, anticipating increased activity and potential future business [21] Question: What are the implications of the federal government's budget for the company? - Management is bullish about opportunities in border security products and believes passing a budget could be positive for the company [23][25] Question: Will the revenue continue at the current low level? - Management expects stronger performance in Q3 and Q4 due to a solid backlog and ongoing customer engagement [37] Question: What is the status of the sale of the 17 acres? - The sale is anticipated to be completed in the current quarter [41] Question: What revenue is needed from the water business to begin making money? - The smart water division has shown operating income, and management is optimistic about continued profitability [43][45] Question: What percentage of revenue does Aquantia represent? - Aquantia continues to be a single-digit percentage of revenue, with expectations for gradual growth [46] Question: How has the Hydrocon connector business developed? - The Hydrocon connectors have seen 10% to 15% growth year-on-year, with recent quarterly growth exceeding 40% [51][53] Question: What is the market size for Aquantum smart valves compared to Hydrocon? - The total addressable market for water control valves is significant, with increasing interest in remote shutoff valves due to cost savings [60][62]