Geospace Technologies (NASDAQ: GEOS), a leader in seismic instrumentation and equipment, has reported a significant achievement in its Q4 and fiscal year 2024 earnings, reaching its highest revenue mark in a decade at $135.6 million. Despite this milestone, the company faced a net loss of $6.5 million for the year, largely due to non-cash charges of $17.3 million, primarily from divesting its Russian operations and impairment of intangible assets.
Key Takeaways
- Geospace Technologies' annual revenue reached a 10-year high of $135.6 million.
- The company reported a net loss of $6.5 million due to non-cash charges.
- Q4 revenue increased to $35.4 million, up from $29.3 million the previous year.
- The company has maintained 24 months of consecutive adjusted net income.
- Geospace ended the fiscal year with $37.1 million in cash and no debt.
Company Outlook
- Geospace Technologies is preparing to transition to new business segments: Smartwater, Energy Solutions, and Intelligent Industrial in February.
- The company is optimistic about the growth of the smart water market and potential increases in energy exploration.
- Geospace is actively exploring opportunities in carbon capture and storage.
Bearish Highlights
- The net loss for the year was impacted by significant non-cash charges related to divestiture and asset impairment.
- The divestment of the Russian entity was a strategic move due to the complexity of sanctions.
Bullish Highlights
- Geospace's Oil and Gas segment generated $77.5 million in annual revenue.
- The company saw a record year for its Hydrakon water meter cables and the first international sale of Aquana smart water products.
- Industrial product revenue surged by 91% in the fourth quarter.
Misses
- Despite overall revenue growth, the company incurred a net loss due to non-cash charges.
Q&A Highlights
- CEO Rich Kelly highlighted the significant revenue figure of $135.6 million, marking a decade high.
- Kelly mentioned ongoing discussions with contractors and entities regarding carbon capture opportunities.
- CFO Robert Curta explained that the divested Russian entity was self-sustaining and generated enough cash flow to support itself.
In summary, Geospace Technologies has showcased strong revenue growth and strategic developments, including its addition to the Russell Stock Indexes and the establishment of a manufacturing facility in Malaysia. The company's focus on expanding into new market segments and leveraging opportunities in energy and industrial sectors positions it for potential future growth, despite the setbacks from non-cash charges in the fiscal year 2024.
Full transcript - Geospace Technologies Corporation (GEOS) Q4 2024:
Shelby, Conference Call Moderator: Welcome to the Geospace Technologies 4th Quarter and Fiscal Year 2024 Earnings Conference Call. Hosting the call today from Geospace is Mr. Rich Kelly, President and Chief Executive Officer. He is joined by Mr. Robert Curta, the company's Chief Financial Officer.
Today's call is being recorded and will be available on the Geospace Technologies Investor Relations website following this call. It is now my pleasure to turn the floor over to Rich Kelly. Sir, you may begin.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Good morning, and welcome to Geospace Technologies conference call for the Q4 of fiscal year 2024. I am Rich Kelly, the company's President and Chief Executive Officer, and I am joined by Robert Curta, the company's Chief Financial Officer. In our prepared remarks, I will first provide an overview of the Q4 and Robert will then follow-up with more in-depth commentary on our financial performance. I will then give some final comments before opening the line for questions. Today's commentary on markets, revenue, planned operations and capital expenditures may be considered forward looking as defined by the Private Securities Litigation Reform Act of 1995.
These statements are based on what we know now, but actual outcomes are affected by uncertainties beyond our control or prediction. Both known and unknown risks can lead to results that differ from what is said or implied today. Some of these risks and uncertainties are discussed in our SEC Form 10 ks and 10 Q filings. For convenience, we will link a recording of this call on the Investor Relations page of our geospace.com website, which I invite everyone to browse through and learn more about Geospace, our subsidiaries and our products and solutions. Note that today's recorded information is time sensitive and may not be accurate at the time of one listens to the replay.
Yesterday, after the market closed, we released our financial results for the Q4 and full year fiscal year 2024, which ended September 30, 2024. We closed the year with $135,600,000 in revenue. This represents the greatest revenue figure in 10 years. However, due to non cash charges in the 4th quarter totaling $17,300,000 the year ended with a net loss of $6,500,000 These one time charges are primarily associated with the divestiture of our Russian entity, but excluding these non cash charges, the fiscal year adjusted net income is $10,700,000 While examining the increasing conflict in Ukraine and potential conflicts complications within Russian sanctioned entities, management and our Board of Directors determined the most prudent action would be to divest of our Russian entity. This divestment resulted in a loss driven mainly by accrued foreign exchange losses which had minimal effect on the value of the net assets of the company.
Additionally, our fiscal year financial reporting reflects another one time charge related to a non cash intangible asset impairment related to our subsidiary Quantum (NASDAQ:QMCO) Technology Sciences. Following our long standing and unwavering commitment towards sustaining a strong balance sheet, we finished the year with 0 debt and holdings of $37,100,000 in cash and short term investments. While the financials indicate a net loss for the year due to 2 non cash charges, we are pleased to have 24 months of consecutive adjusted net income indicating our core business remains profitable. We started the Q4 of fiscal year 2024 with significant contributions from our oil and gas market segment with more than $20,000,000 in sales and rental announcements for our OBX seabed nodes in August. This follows a trend for the fiscal year of multimillion dollar contracts for this product line and contributed to an overall increase in revenue from the prior fiscal year.
In our adjusted market segment, we enjoyed a record setting year for our Hydrakon line of smart water meter cables and our Aquana product line. The market continues to recognize our leading technology and resulting growth outpaces the industry. We also had our first successful international sale of our Aquana products. The Aquana product line generates further traction in smart water markets for both municipal and multifamily residential applications. We believe that our focus on smart water going forward will continue to drive growth for the organization.
I now turn the call over to Robert to provide more financial detail on our Q4 and full year performance.
Robert Curta, Chief Financial Officer, Geospace Technologies: Thanks Rich and good morning. Before I begin, I'd like to remind everyone that we will not provide any specific revenue or earnings guidance during our call. In yesterday's press release for our Q4 ended September 30, 2024, we reported revenue of $35,400,000 compared to last year's revenue of 29,300,000 dollars The net loss for the quarter was $12,900,000 or $1 per diluted share compared to last year's net income of $4,400,000 or $0.33 per diluted share. For the 12 months ended September 30, 2024, we reported revenue of $135,600,000 compared to revenue of $124,500,000 last year. Our net loss for the 12 month period was $6,600,000 or $0.50 per diluted share compared to last year's net income of $12,200,000 or $0.92 per diluted share.
In the Q4 ended September 30, 2024, we recorded non cash charges totaling $17,300,000 To add additional detail to Rich's prior comments on this subject, $14,500,000 was from the divestiture of our Russian legal entity, while another was a $2,800,000 charge from the impairment of tangible assets from our Quantum Technology Sciences subsidiary. It's important to note that the divestiture of the Russian legal entity has virtually no effect on the company's net assets as most of the charge came from cumulative unrealized foreign currency translation losses previously recorded within shareholders' equity. The oil and gas segment produced revenue of $17,500,000 for the 3 months ended September 30, 2024. This compares with revenue of $17,800,000 for the same period of the prior fiscal year. For the 12 month period, the segment contributed revenue of $77,500,000 versus 74 $1,000,000 for the same prior year period.
The 12 month increase in revenue is due to increased sales of ocean bottom nodal products such as the Mariner and sales of OBX equipment from our rental fleet. This was offset by lower utilization of our rental fleet and lower demand for seismic sensors and marine products. Now our adjacent market segment revenue, which includes our industrial products and imaging products. Our industrial product revenue for the Q4 of fiscal year 2024 was $14,600,000 compared to $7,600,000 for the Q4 of 2023, an increase of 91%. Industrial Products 12 month revenue for fiscal year 2024 is $43,000,000 an increase over the same period in 2023 of 17%.
Both periods increases are the result of record high revenue from our Hydrakon water meter cables and connector product line. Imaging product revenue for the 4th quarter was $3,000,000 which is equal to last year's revenue for the same period. The 12 month revenue for imaging products for fiscal year 2024 is $12,600,000 versus $12,200,000 for the same period in 2023. Finally, revenue from our emerging market segment for the Q4 was $200,000 compared to $800,000 for the same period in 2023. The 12 month revenue for the segment for fiscal year 2024 was $2,200,000 compared to $1,200,000 for the same prior year period.
Our 12 month cash investments into the rental fleet was $8,300,000 and cash investments into property, plant and equipment was $3,900,000 As of September 30, 2024, we have $37,000,000 of cash and short term investments and $15,000,000 of additional available liquidity from our credit facility. In addition, we own numerous real estate holdings in Houston and around the world that are owned free and clear without any leverage. This concludes my discussion. I would like to wish everyone a Happy Thanksgiving. And now I'll return the call to Rich for his closing comments.
Thank you, Robert.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: As we announced in September, this will be the last time we will be reporting earnings with these business segments of oil and gas markets, adjacent markets and emerging markets. Beginning with our release in early February, we will provide financial information using our 3 new business segments Smartwater, Energy Solutions and Intelligent Industrial. Other highlights of note this year included our company's addition to the Russell Stock Indexes, the Russell 2,000, Russell 3,000 and Russell Microcap Index. In a final note, we would like to thank Rick Wheeler, our outgoing CEO. Rick dedicated almost 30 years to Geospace.
He led the company through successful and tumultuous times in the industry. His guidance and foresight provided stability and opportunities for growth through diversification. His management and leadership allowed Geospace to remain a strong presence in the seismic equipment market while taking advantage of their engineering and manufacturing capabilities to explore new opportunities in adjacent markets. Rick will remain as a member of the Board of Directors and we wish him all the best in his retirement. This concludes our prepared commentary And I will now turn the call back to the moderator for any questions for our listeners.
Shelby, Conference Call Moderator: And we'll take our first question from Martin Lorenzin with Private Investor.
Martin Lorenzin, Private Investor: Hello, Texas.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Hello, Martin.
Martin Lorenzin, Private Investor: I'll start with what should be the primary focus of every public company, which is capital allocation. Given your strong balance sheet, what's your timeframe to increase the buyback program?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: At this time, we don't have any intention in the short term of doing any more stock buybacks.
Martin Lorenzin, Private Investor: Got it. And on the energy segment, several public companies note an uptick in exploration, particularly land exploration now. I guess it has to do with administrative changes that are about to be done. And when do you expect to capitalize on that? I know you had a product launch, but no sales yet.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Yes. I would say that while there's maybe excitement in the industry, we've not actually seen that translated into actual orders for equipment or rental contracts for equipment. We're well positioned for that with the launch of our Pioneer product which is now in manufacturing and with our OBN products with Mariner and Mariner Deep. So we're well suited and we'll welcome any orders that come in the door. But as it stands right now, we are not seeing the excitement translating into orders for our equipment or services.
Martin Lorenzin, Private Investor: Got it. And now that the Russian segment is gone, what's the cost savings associated with that?
Robert Curta, Chief Financial Officer, Geospace Technologies: The Russian entity was pretty much self sustaining. They generated enough cash flow to support themselves. In the end, the cost from them was very insignificant to us as a whole.
Martin Lorenzin, Private Investor: And on the OBX rental fleet, could you update us on how many nodes you currently own?
Robert Curta, Chief Financial Officer, Geospace Technologies: We don't normally give that information.
Martin Lorenzin, Private Investor: And would it be fair to say that you currently utilized your fleet at around 40%?
Robert Curta, Chief Financial Officer, Geospace Technologies: We also don't provide that information. Sorry, Martin.
Martin Lorenzin, Private Investor: And on the carbon capture, that sector seems to be already industrially scaled. I think the U. S. Department of Energy just approved a 2,400,000,000 commitment to apply CCUS to an Indiana coal mine. I think just recently, just yesterday BP (NYSE:BP) green lighted the $7,000,000,000 Indonesian Greenfield gas project that also includes carbon capture and storage.
Do you expect to be involved there given your ongoing relationship with BP?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: I mean, we've had ongoing conversations with several different contractors, several different entities. But as it stands right now, we don't have anything specific to report or comment on. And is the
Martin Lorenzin, Private Investor: margin profile within the carbon capture and storage application comparable to the reservoir monitoring business?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: It's hard to say. I mean, there's not enough historical business there to say if that's really if you can really do a comparison between the 2.
Martin Lorenzin, Private Investor: And on anything water related, could you give us a rough sense of how many customers you currently serve?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: On the Hydrakon water meter connector, we have within our customer base the majority of the major water meter manufacturer OEMs that we do business with. And on the Aquana side, as you know, that product just launched this year, but we are in communications with a number of the suppliers in that industry or customers in the industry, I should say.
Martin Lorenzin, Private Investor: Okay. And on the expense side, anything tangible you're working on currently?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Nothing of note.
Martin Lorenzin, Private Investor: Thanks and good luck.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Thank you, Martin. Thank you.
Shelby, Conference Call Moderator: Thank you. We'll take our next question from Jeffrey Feldman with Primary Succession Capital. Your line is open.
Jeffrey Feldman, Investor, Primary Succession Capital: Hi, gentlemen, and thanks for taking the call or the question. I see a reasonably good outcome in the quarter. So good luck with that and looking forward to the future here. My question was really simple, how to do with the changes with the Russian facility, let's say. And I wondered why the last few years you haven't taken that action sooner.
I was interested on the operating impact. Do you have any capability issues or anything there that you'd want to share given that you don't have access to that resource any longer?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Sure, Jeffrey. I'll start with why the action wasn't taken sooner. The reality is that we were still able to operate in Russia for the last several years even with the sanctions. But what's happened recently is several of the large Russian oil seismic contractors ended up on the sanctions list, which means that we would not our Russian entity would not have been able to do business with them, but the Russian government could have forced our hand and then we would have been in violation of the U. S.
Sanctions. So it was a difficult decision, but one more politically driven than anything else. And so we decided it was the best thing to do is just to divest ourselves with the entity. From an operation standpoint, we had already been working knowing that that potential could happen in standing up a manufacturing facility in Malaysia with a third party contractor as well as improving our operations here in Houston. So I think we're well suited to continue to meet the needs of the market for our equipment, even with that change in ownership.
That's not to say that we cannot still have some sort of relationship through a third party going forward.
Jeffrey Feldman, Investor, Primary Succession Capital: Okay. So just to clarify, there's minimal operational impact from that change?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Very minimal impact.
Shelby, Conference Call Moderator: We'll take our next question from Scott Mundy with Moores and Cabot (NYSE:CBT).
Scott Mundy, Investor, Moores and Cabot: Just a question regarding the Russian subsidiary. We had cash over there. Is that cash retrievable or is it lost?
Robert Curta, Chief Financial Officer, Geospace Technologies: We've retrieved some of that cash, but we're not going to be able to get all of it.
Scott Mundy, Investor, Moores and Cabot: So Robert, with the 17 acres for sale next to the plant, what's the status of that?
Robert Curta, Chief Financial Officer, Geospace Technologies: We're still working through that contractor contract with the buyer, but we expect we'll see that to the end.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: The expected impact is early next year, Scott.
Scott Mundy, Investor, Moores and Cabot: So, Q1 of next 1st calendar quarter, correct?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Yes, sir. Yes, somewhere in that timeframe.
Scott Mundy, Investor, Moores and Cabot: And there are on your report here, you've got assets for sale something in the vicinity of about $1,800,000 What is that?
Robert Curta, Chief Financial Officer, Geospace Technologies: It's a facility we have in Colombia.
Scott Mundy, Investor, Moores and Cabot: That we that's been for sale for some time, correct?
Robert Curta, Chief Financial Officer, Geospace Technologies: Yes, it was on it was for sale in the past and then we leased it out to someone who could use the warehouse and now we've decided to put it up for sale again.
Scott Mundy, Investor, Moores and Cabot: And are we reasonably optimistic of the sale within 6 months?
Robert Curta, Chief Financial Officer, Geospace Technologies: We're just beginning the process. I don't see why that's going to be a problem, but it's this is early in that search for a buyer.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: We're still waiting on our broker to give us an opinion what's going to happen with the Colombian market.
Scott Mundy, Investor, Moores and Cabot: Okay. And so, Rich, just seasonality associated with the water business to run rate in the Q4 was really good. Aquana, are you willing to tell us how much revenues Aquana or some percentage of revenues Aquana contributed?
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: I mean, as you know, Scott, we don't provide that kind of guidance. So unfortunately, I won't be able to share that. But as far as seasonality in general for the Hydrocon water meter connector, we do see a slight slowdown in the calendar 4th quarter and we are seeing that, but we still expect to have and we do have strong backlog in that for calendar year 2025. So we expect them to be on track for another strong year in the water space.
Scott Mundy, Investor, Moores and Cabot: And finally, Robert, I assume because you didn't put anything in the release that there were 0 shares bought back in the current quarter?
Robert Curta, Chief Financial Officer, Geospace Technologies: That's correct.
Scott Mundy, Investor, Moores and Cabot: Okay. Thanks guys.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Thank you, Scott.
Shelby, Conference Call Moderator: Thank you. And it appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.
Rich Kelly, President and Chief Executive Officer, Geospace Technologies: Thank you, Shelby, and thanks to all of you who joined our call today. We look forward to speaking to you again on our conference call for the Q1 of fiscal year 2025 in February. Goodbye and have a good day.
Shelby, Conference Call Moderator: That concludes today's teleconference. Thank you for your participation. You may now disconnect.
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