Geospace Technologies (GEOS) 9 Feb 232023 Q1 Earnings call transcript

Welcome to the Geospace Technologies’ first quarter 2023 earnings conference call. Hosting the call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Robert Curda, the Company’s Chief Financial Officer. Today’s call is being recorded and will be available on the Geospace Technologies Investor Relations website following the call.

participants floor placed your will the all mode a questions time presentation. the and be this have on been listen-only following At opened for over pleasure It turn now Instructions] Wheeler. my [Operator the is floor to Rick to Sir, you may begin.

and Brittney. the year by Technologies fiscal conference to you, Executive joined of Rick I’m Financial Curda, Wheeler, the Thank the President welcome quarter Officer, and I’m for Chief first Geospace Robert Chief morning, Good Company. of XXXX. call the Company’s Officer and

prepared provide these first financial an commentary In questions. comments, I remarks, provide for and our line final overview will quarter first we Robert of the will performance. on an the After some will open then in-depth

expenditures or Securities are considered by unknown the predict affected on may implied known defined lead Form in of include say risks we from are Reform we while today. we filings. Litigation can as actual those be results outcomes or recognition, Some markets, These and XX-Q our and risks about capital today’s uncertainties that forward-looking Private comments XX-K of present SEC, awareness, based revenue in what uncertainties differ make cannot XXXX. Act our Statements and control. discussed Both planned and to operations

replay. and accurate of the listens For browse may not you our Relations recording we products. geospace.com convenience, time sensitive morning at and will the that, I link more the when is Note recorded recommend that this website Geospace this Investor website. about on call our a be the to page time learn And of information our to

to same We financial XX, $XX.X year’s million, fiscal quarter October XXXX. after reached Xst increase XX% revenue an through quarter pleased period. the the year our XXXX. results the of for first market see for of Yesterday, we reflecting last closed, Spanning over December were that, released

Gross of $XX.X back quarter profits reached X.X-years, three amount of represents revenue in last strong the and June quarterly the to million. were Moreover, also highest XXXX. going a for high the company’s year the

expenses, other narrow all of a in first share. $X.XX the posted quarter loss Factoring net per

loss it noted in However, be after one-time the including million charges. comes that, $X.X must slight

These were of to inventory non-recurring of streamlining future our Those our profitability segments. actions and our costs. repair costs, restructuring from Russian of write-offs stem business a revenue achieve costs increasing operating operations, charges each in combination commitment through and reducing

of seismic first wireless majority our and revenue products. segment The quarter from led came Oil Gas by

from fleet from wireless land a While of the rental contributing ocean bottom our nodes. of seismic revenue sale our GSX came was portion equipment OBX The largest factor.

performing from Rental the certainly revenue OBX rental contracts largest was component.

of a during However, equipment the continues out the deepwater OBX and revenue result models a survey. by OBX that significant strengthen. for lost equipment this as replenish water for in the to nodes of to shallow lost to a amount rental fleet, was additional We compensation was rental OBX intend OBX related demand build customer both

increasing follow-on growing number significantly. technology their out an of in bid, existing are nodal complete. is contracts water an demand put this existing being our stated Many customers Combining surveys intention of Mariner New for client their have move crews to also and after with using to shallow surveys our interest

performance of Our by strategic fruit, continue evidenced market efforts bear diversification as segment. to the adjacent our

move third all revenue X% our in time toward from profitability. records its of year’s products to quarter, adding within traction quarter First set these last

of we maintain their customers. and this meter to of position, climb. municipality our a and ruggedized work products To premier trusted domestic connector position supplier the manufacturer water meter cabling, design with to closely these in companies As market meet continues water specifications

in these with this products that the cables gives continue. us well smart valve Aquana discussions taking for growth confidence, as of specialty place breadth future The partners market as will

the Robert turn financial now to will on give quarter to over detail performance. With more that, first call I

Thanks, good morning. Rick and

begin, like will earnings guidance any revenue remind provide morning. not during or would our specific Before that, I we everyone to I call this

In XX, or XX reported we per yesterday’s X.X compared of net year’s million. our million last per or quarter revenue share. XX.X $X.XX the for share of compared quarter quarter loss last press diluted XXXX, a to first revenue ended diluted Net for the $X.XX December first release loss XXX,XXX to year’s of was of million

up ending as revenue and of XXX,XXX X.X XXXX compared was traditional for marine Russian sensors entity. last products. The oil to and are is higher the increase a product revenue sales the and product for modest due increase period long-term an in the international domestic three our for million sales Seismic to follows, to gas company revenue sensor December revenue demand Our due month and is XX, seismic in with year. order

rental revenue lost rental revenue OBX our quarter X.X increase of higher from for marine a of last revenue XX% nodes. product utilization wireless compensation wireless for from Our XX.X higher million to million, higher fleet the due product The customer’s an OBX to was compared increase in is of revenue and revenue rental year.

is markets demand our segment, smart first to cables. and water five increase million, The a X.X revenue product XX% Moving year’s an meter due for adjacent industrial was our of million. our product to of compared connectors quarter to the higher increase in revenue last for revenue

was year the same same December Imaging the to for product products in slight compared during as holiday of X.X revenue three-months explains quarter year. XX, reduction thermal film XXXX last when for revenue period to demand decrease a first period. Lower X% from million, the prior ending season the million X.X for the compared

segments market Border for emerging is year Protection for periods XXX,XXX quarter U.S. first our XXXX. The revenue of the to to Customs the contract from both the compared year ongoing XX,XXX of Agency. and for XXXX fiscal is fiscal of related with quarter the first Revenue

higher fleet, increase wireless demand was of our product first Our consolidated fiscal to marine gross products. quarter utilization cables to sales, year. the and OBX in was XXXX water million and due compared last rental for gross X.X year of exploration increase XX.X profit meter for our connector million The profit higher

increase The first first is are X.X related due XXXX. contingent quarter for reported XX% of of is fiscal three-months compared operating non-cash to increase of This our the of estimated an year when quantum and the to million. XXXX for to fiscal consideration The year year expenses in million the fair the prior acquisitions. value change a adjustment a favorable XX.X in at sites

our prior decrease increases higher Severance we by revenue. announced administrative in general in costs. These selling and costs from are in resulting partially our a expenses offset project and increase R&D teleconference

XXX,XXX. rental into equipment investments and property QX XXX,XXX investments fleet and plant is XXXX were cash cash into our our

capital be be to much warrant the as million our for six rental much provided one million could plant the in new rental Our fleet Investments as and investments fiscal contracts year. as could as fleet. into property equipment XXXX the additions

balance reflected Our short-terms XXXX XX.X - we at ability and fiscal investments, and bank sheet our X.X the agreement. million investments borrowing and of year credit of under of short made additional term we end first quarter million the of cash maintained

the Thus, real total liquidity was are XX.X We estate leverage. around and Company’s owned own debt free any Houston the million. and clear without numerous in no that currently holdings world have and

back discussion, concludes will to my turn call This Rick. the and I

contract Subsidiary Thanks, Robert. federal Quantum Sciences Technology contractor. new After a closed, the an secured government with undisclosed quarter our first

work. initial strategic unrelated application holds for security potential the significance serving to in is an previous future amount While dollar it border of our contract modest, the

active In applications outlook other emerging conjunction Analytics for segment unique with multiple we projects Technology, our discussions is believe Quantum’s surrounding expanding. of in the market

our our costs, of anticipate use satellite the of part of the and completing rental OBX within we the operations process sale quarter. currently reducing our which As main location. houses our are we consolidating streamlining second into operations, fiscal plans campus facility for facility in This

profitable quarter We planned some believe efforts maintaining consolidation, the the after sheet vigilance for shareholders. returns will our first a successfully this strong obsolete closed. and our continuation In equipment us accommodating lead balance in we sold of to

prepared and this back that, from for listeners. will Brittany, over turn to I our our moderator, now the questions call With our commentary concludes

who you. Laurinson] our a we take Private Now from Investor. first will [Operator [Martin question Instructions] Thank (Ph), is

Your line open. is now

for my you I Texas Hi, and may. have questions. to a taking as few Germany, from I thank

can about Are indicated as quarter The some facility? additional you first call last one, sale, talking Road well? this light Langfield shed property on we the the you on

is we That one about. exactly are the talking Yes.

further And streamlining of can terms in you. operations, year? expect this Thank sales we Okay.

we fact sale, equipment as Well, and think putting our there open those our examination going our to are that. as properties far plant in certainly we our profitability. to us beneficial would our approach in in assets in goes. If be property, that our with at point that for don’t shows plan be anticipation any I for of up this towards overall examining is doing but are

shifted well? potentially given that onset be picking since on how you happening And address the can it. and to the pandemic, Got the share that market in level, up of higher consolidation Europe as seems and especially the

market up. in several mean, that. had the it years Well, is lowest has is subsequent picking part exploration for for the gas to a for effect now at been Seismic oil demand the on I and overall massive been most the ever The history. certainly and pandemic

as But that that, coming being oil the pandemic, general so demand from China energy is the in happening out for its with is and is Ukraine as and of the gas fact in more what the isolation case, well we see improving.

most driving is today. that of is see what think I we what

of don’t improving. things, much And occurring nodes also improvement there the we revenue you It are is see space. in offshore of side this although that rental our that, ocean OBX, in are signs we true that fleet is time. why Most see driving bottom that at land our our point and in what the see is of as certainly

it. Got

lastly, last that then for you the we balance to capital - see can we seen expect freeing further have working look over and like? quarters what up And room the Okay. do cash do of few what you

do many the for cash. give are as don’t things we good were, it guidance conservatively the as years Again, by. I in future gone think those we for are our cash we how looking is but manifesting - to exemplified manage any

ourselves shape respect in to be expect good we our with cash. So to

and good Thanks Okay. luck.

much. very Thank you

Dezellem Our next question with Capital. Tieton comes from Bill

line open. Your is

Would Thank like for the and with I us? would land is those market the are through just improving. start there made that comment walk you you small you. to that Rick, some it signs about

are still coming are these many there but the of Certainly Well, seeing depressed, even America, about we in North things improvements. in Canada improvements and foreign are locations.

has land in the think sort side levels, pent-up been we that to of too I To exploration recovery seismic early driving demand at still be overall, tell, what might business. what we some is little might see that. is bit a But the extent believe there of low it such of just that the that is of

you. Thank

in interest was product rental or product, us new understand to that, Mariner you that Would predominantly mentioned So you’d help the interest? then relative purchase there an that whether gaining if increasing is is interest.

design both, was bottom we cost is of a the certainly, compared has that historically represents but of engineers ensure nodes. It to costs for one actually to manufacturer. the in been the That primary Mariner lowering targets what that while very effective ocean maintain quality available our could was solution

successful I that think force, both out see of the features on side, to have there. we manifest. those a the find not also sales the is that to have are interest, sure driving you I think that certainly an extent rental what and side to units on and the sales will equipment that That going I’m been it with and is that, but rental driving be the general has in said, being will

you a business? this and driver are a versus years look the that now of in how OBX on from Rick, terms bigger Mariner of you And is of see say thinking back, couple what may

too is hard That to predict. really

bottom So long surveys as persists. of ocean the prevalence

a not future serve The I think the well, has for that if well, equally industry were. is technology is good Mariner it as going the OBX very Mariner it serving and it, to better.

cases where be OBX between and making customers or or serving choice applications? where a see be share Mariner, you taking will are Mariner will do really from different And OBX they

a the not shallow you water XXX. going case overtake just a designed one think, see other node Mariner from the OBX view. use is of like The are I point particularly to No,

well been and it cross such systems can as extent, equipment operate them data designed is the both units. these of two. that is combination as the of carefully you can that compatible, simultaneously operate mix completely The from any that to each So that cross

some Now, same embedded design to seen has improvements in the of one is so the deepwater that its very speak. OBX

market, but different uses. a case of see So, it to a Mariner current serves shallow going what are represent than use not different water you the the the version OBX

together. mixed going to be So, and they both be are able to

that is discussions set with are with? Aquana buyer you you Great, shifting Aquana. same about And or buyers thank the are are those meter that that with connectors of this a you. Are you water to then the interacting different talking there are the

definitely and completely It is meter water cables somewhat it those the but group cables just valves combination that with meter are are same a The used. customers the the a going do. in water of that used of themselves intersects both, than be different fact to market environment is

some is there crossover. So

also also. for management We property purposes tar targeting are valves Aquana

is entirely that an set So customers. different of

is Yes, good a that point.

So it market is altogether. the of really is It a the needs addressing of the aspects different not municipalities.

or would Okay real implement be and or estate the decision property existing case, so apartments, new making either a be interacting managers to with owner you that existing with in that with with these construction or would

sorts services that perform providers owners. That for is exactly property service right and/or those those the of

new if would may Quantum, happened to contract we the that quarter shifting then you here discuss after please And end?

into it. get really of much too Can’t

the known is available targeted details the contract, that going aren’t it significant. is it well very will with for But to to we easy this use is commerce federal particular say of that very this as available to discussed really case with - far at point. purposes enough be specific contractor that a As and be

you you additional was that the was here did I that the mentioned an this for Thank note please. orders And of fiscal would so written in nine-months. to more plural it year, you. if take And as release, that, then, next in Quantum the remainder the that, release has orders. in Talk expectation

business. we and quite the is, analytics doing Quantum into that of expanding other the things our and are the includes other components spaces. in the energy the of That of gas one middle Well, and utilization oil of

those discussions is what into So, we some examining to to that in we going and things additional sometime do with we be as fall are that are contracts for much this expected agencies have of government well category, issued are year. there

Great. Thank you both.

Feldman Jeffrey from comes with Primary LLC. question Succession Capital next Our

now is line Your open.

to guys Thank on you. a updates, and I you long company. a keep which the fighting, And just sounds really like have all time, is things are been Thank the cash you are for which to And tremendous. it turn, my outcome think then availability shareholders see is I back liquidity to and hoping great. goes to just starting the question achieve. you

The cash balance against had you the CapEx reported. that

the on comment. year this capital working it, I’m it sort in is there so half math. of a there is need feeling bank and this or guys When I I something kind I to work or simple and going forth. two understand make existential years differently? it understand is right at seeing horizon. you of line are look it see You forward-looking But Am I is the that to do a

in at forecast, XX-months looking position. in our - good next cash a in this we don’t we shape think positive We are pretty

liquidity So at point I’m point. concerned not really a from of this view

great. Great,

I nervous, are won’t be not you guys. Thanks If nervous.

Moors Scott Cabot. & [Operator next from with Instructions] question We take our will Bundy

open. now is line Your

guys. morning, Good

can the building of what the just the will idea be quarter? give Rick, you what sold the - value building rough in of So us a

on I I do that We is substantial this it very will don’t that. become to a mean, quarter we It the definitely our it sale us in not think closing close evident, very, shattering, that have as revealed I’m sure second and that anticipate we on gain anticipate benefit here. a books. also quarter. is earth but we property

the equipment, how from six guessing if that much, million earmarked come for of have And you would are any rental Mariner? you

this can be going Mariner fiscal to that the that. is Mariner contributing part a of certainly, And the going not what of I later begin tell on is. the big to Well, is until construction you year,

be the going see the is end you so to or in Mariner and then something that, the year from revenue of more fiscal forward. the think tail I going

in And still give Rick, those quite some deepwater about are hearing the players no us if opening lot you discussion your idea, regarding keep We other an from PRM, field? customers up market awful can dramatically interested. multiple

is much the good active. interest ongoing very there not because is really much a is new. there That And not yes, question. But is absolutely discussion really and

our their facilities, being active as We those have at at well as here representatives discussions had facilities. with

the is examination out most point, I in of So the still there. is the floating, to largely deepwater think assets and that, interest of getting the keeps those mind. what top And these your discussions of

looks idea market you idea us that if for addressable potential are market us of are just addressable Rick, type can that you successful? we give can a are the give of or talking talking you about any rough I what PRM mean, we like Quantum, contracts

are, I as numbers didn’t enforcement the was opportunities actually itself be it significant. be some revealed are that we of going both those with think for bothering to to the well think military think ones going what Again, certainly don’t wouldn’t those in involved some if And we is as government we we but be law of it have the agencies.

wireless Last land your still absorbed, issue? been that has or the that customers by an customers, inventory most question, for is of existing

wireless it its No, equipment to of is we fact, some land of land in of in what There we sold space and made the to in fleet. release. Certainly, customers, in product. a was was as it revenue that hands have wireless still the out this has inventory rental referring our that product were space relates of component the that to way

I’m sorry, one more question.

reminds me what of So a Would you this lot environment me you XXXX. seeing? are agree to of terms in

one its these in every character mind, own personality. has own cycles my In of its

see this things past are very some in in that to what are of similarities a do unique the regard, to I there situation. that happened While has lot

drawing. So, the that correspondence, you would I but that know I one-to-one have I are analogy don’t understand do

guys. Thanks

Dezellem Bill from Tieton with question follow-up a have We Capital.

open. Your line is

versus when taking the conversations decade well, the Thank PRM, were place? to question ago, a how those you. back discussions in, down today are relative different Continuing XXXX

on, be were that the earlier they a going was sooner tender occur. at think time, they anticipating putting I Well, to that out than would actually

the more little discussions have So realistic. a I got think bit

that amidst would fiscal we to these land in year. the generate is we a way in such any say to opportunity That even would this discussions, offer it why that expect anything don’t revenue

So would that all that years. these that we fiscal are on in discussions subsequent things come in see focusing all

it something philosophically use companies configurations versus case for today different very similar? then And be whether oil the or just different, are looking a

lifetimes mean, have are they to want they think that the fields early. and standing into these needs similar. very I long them are I and long to get are

So Other are new that fields of fields. of already these brand some exist. these are

general that discussions it is I think So what been. have very why sums up the to similar the of nature are and they they basically

And you Rick, contribute Do lead would not this you year see revenue this in said fiscal anything that to you anticipate anticipate may year? to though don’t any - they you revenue year. this would that orders even

I occasions I’m not possible, has again, probabilities on given high anticipated that occurring several the on occurred of that is think putting already but some in tenders. these slip that

equipment Alright that was then and with revenue was per was what the the customer? then, finally, associated that lost OBX

in not honestly, party are are leverage in You exact to that to in quite exact those And only could that the that benefit that know, number did to area the our number. competitors and our both ones to try reveal area need that way. know information largely customer’s we some their because transaction

that three have our will few that But were there as we significant same in that that quarters span that that within transparent have also will would was sale say the without as in Even say taken out, they been that, to span. I had highest, we that the quarterly have been years, have maybe make that be in same better. that, it and very would of revenues. time was that been would revenues and we could But didn’t fact note I that X.X

Thank Great. you.

We Michael with question will Gate [Operator take from Instructions] our Melby City Capital. next

is now line open. Your

profitability about I Hi. high-level is you And dependent business your realizing or highlight discuss, of you to encouraging Good on either is is to think morning, model, you results. as within and business the and the where revenue, revenue realizing congratulations to you to new lot commentary, to don’t need and talked envision gentlemen investors and a components improve to you to on talk to but the on get cost it you plan a get be. a probably side the that components higher path you at profitability could you on want your about you you think a and can

be frame community. would way investment that to to think helpful it I the a

Yes.

and I fronts the our going think be in efficiencies, Mike. ones pieces And that and those, detail plan. which which examining them. manufacturing assets those to do not, are pursued, are we in we on all of So are the greatest putting that our be acting still of Part going is as puzzle aspects our great working cost put operations, that where to ones our is have capital best are of what’s structure is the have use? to we to discover exactly together

side, there all revenue need is segments. the On in a these that, clear to revenues aspect of increase

well going our on. expansion the there for on forecasting to we products capacities known are in areas organization, very good So efforts see some within that increase

So combination But of we really specific to be none going things. you at it of a which in say, as annotate can this sorts manner point. of those any is

Could that side profitability you you those be thought all you about come to our timeframe how I can close think about together. think any it to goals? challenging get highlight to from your internally

this are we Well, significant improvement that. making year, on targeting as certainly

forward seen terms of of far go you quarter, it things, are things, see as what restructuring this in as As in that as we of our you of have more going examination to were.

not pensive overnight something that and as examination, it go really we is that happens something this forward on some stuff. So requires is it

not something could you on be could So that kind something give I really it. I accurate wish timeline, a I would but of you give

just rental included lost, was in on Okay. was maybe quick or that revenue? the a equipment revenue rental product OBX clarification, that And equipment

It was revenue. included in product

you. Thank

from question we our next take (Ph). And Amagou will Capital Levenson [Father Management] with Levenson

open. now is Your line

Thank morning. you. Good

value that, loss. always and meantime, hanging investors. lose badly, in and Wheeler’s it many me, that you outster. place is team are is Price The with the of a price is like this this been And current To company. down, company, great leadership equity really to owner’s something destroyed. is really which quantitative panned breakeven under I way yet always like of just that here perspective economy Board’s money. the leaves management you a is benefits governance The mean, for guys carrot investors money. the guys has Board XX least really lose going is failure. the in acquisition of of earnings are think long And I close quarters up, hasn’t shareholder doing in dramatically and at is the and guys booming, last management team you A reduced the you and like have are a owners come XX% from front It only the the oil well been qualitative Retained the of and is But bottom-line getting the not it a is of lead it the you guys corporate equipment should management always loss, pretty oil losses? money. to out failures. apparently this while in is years. hidden Rick Board you up. couple goes of compensated, the feels bloated, corporate lose Quantum because looks And lose an governance money. host. quarter economy is the goes salaries SG&A, guys That been of The

intelligent you about Rick losing profitable? going think have said, are when should call, money. great are you and solid I keep You that. you very, answer. Investors great And R&D. the a Wheeler, never have until guys to to always Board Every honest can are I somebody going very have you it, be give investors asks clear, concerned the technology, be about got conference

are hard a You you year to wonder when think and buttress look of I that. really are estate are sitting sell, to to the cash on I these to run company guys out but investors, year real a to have you thinking about assets not adequate who to of after and ton going hard after for are your needs company to that day’s run These at just you on about take what come year. position. sell of assets, failures and answers going why owns start say the going out

in many the are respects, most Well, how are respects, I mean, think you -. well operates. business all we managing about really I in wrong ourselves

of construction Is wrong? wealth leadership. is the not value that earn your to number. under understating and shareholders exist shareholder Rick, I that investment a their Well, that and in Am increase I’m overstating? value business. that profit their wrong? businesses of I’m to

have done that. You not

not eight reverse earnings. You Look the for wrong. in statement? years. I’m where balance true been me have that a at retained Is a sheet. statement Show on income your

to down about You Look what single your goes shareholder do at find going to got have it? is That is it quarter. equity, eroded we them. Well out. every That straightforward -. what are you

going that think, and producing you mean, extent are we I seeing, that occur. revenue to aligning ourselves that with to more are what restructuring we the something that doing is are that components those are see I Well, are you

be Well, in cut think should board because half. hope is true, that honestly, this I I

think size. for your step should bloated company with is honestly, down. a And extremely market cap it you I Rick,

has terrible been Your economically. performance

think You on seem it. oil a of this but shareholders like just shot guy. effective capitalize can an a an nice price guy, And these would CEO The than you up, performance. indefensible I have guys is nice rather

is companies. compositions left right. Your capitalizing and E&P with spending record There

is answered are flow The line, mean, that cash Well, encouraging. be positive. credit going your he, burn somebody CFO, bank look Well, your dwindling. that cutting I cash cash to he I your rate. constantly just - mean, not asked is is we at your

and left real estate. run to real right, selling out are going estate of you You but are

talk on vacation of running fact but Gary’s exotic great some a when the every he to matter the CEO, him. I Gary company, He retired. out time In is was is, was

not are them. of is Gary’s through just Gary You problem now under those And the here. and are accumulated leadership, that we were burning Owens. And all assets

it and - got something indictment of quick. academics isn’t is playing you these your all they change who this board to personally to is Look, off got that And rocks. talk has is who Rick, got you change, because And people but Wall to who are with an got get board all you on understand that Street some you about get to. to talking

to you to Colorado talking geologists the Street, are School from You talking of are not Mines. Wall

So heart. and hope $X.XX my take I to you guys that it is

Alright. Well noted.

It additional have any no program Rick remarks. will over turn appears or for Mr. time. at further questions I closing to back this we Wheeler the

and call with we Brittany, and thanks fiscal thanks you call quarter on our the today, in May. well, our look Alright, XXXX again joined forward all conference to all second of who to of year you for speaking

thanks again goodbye. So and

Thank Geospace does your first conference today’s at a wonderful disconnect line you. conclude time, this day. have XXXX earnings call. and quarter Technologies’ This Please