Geospace Technologies (GEOS) 12 May 232023 Q2 Earnings call transcript

Good day, and welcome to the Geospace Technologies Second 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. my turn now to floor is Wheeler. Rick Instructions] It pleasure the to over [Operator begin. may you Sir,

Thanks, financial final and year Financial Good Executive the the Wheeler, Todd. company's morning, company's prepared remarks, an Officer, second of we call Technologies the by quarter and quarter for and conference second Chief I'm then of Robert and the Officer. In fiscal questions. I'll President provide XXXX. joined Rick welcome overview I'm Chief to line Curda, some our Robert commentary in-depth performance. will open our on the comments, first provide After will for an Geospace

Litigation Some make differ present expenditures affected of are to considered in Both and or our unknown awareness forward-looking risks based or revenue recognition, or commentary Securities by uncertainties XXXX. that what markets, -- defined actual on lead may predict. that Act statements cannot control The implied planned today. known from Reform outcomes can is said operations are of incomes we be we on and as capital results Private today's the

of uncertainties risks discussed in these SEC XX-K and filings. Some Form are XX-Q our and

commitment to January second We X of performance quarter second XXXX. year for report listens time we it through delighted recorded information year quarter closed, and Geospace when be the the fiscal will results such the XX, March recording our solid net the represents spanning XXXX. the at everyone XXXX our in real were make the products. convenience, for results financial today is time-sensitive figure fiscal and And this to call profitability. and the in of $XX.X that browse exceeding our on Revenue million almost exceeded demonstrate visit -- $X.X will X As for Note website, which our may not replay. Yesterday, mentioned, our serves about more released Investor accurate to years. highest we of income page million market hope Relations to a geospace.com recorded of I to learn after quarterly

Although the rentals The Langfield a those the and OBX income it's second of bottom our million of single profits net profits operations. our -- contribution from gain our most ocean of came clear of the nodes. to quarter gain that the on income revenue on facility, largest $X.X came for first fiscal includes dollar and the year from sale half

our seismic valves. segment less meaningful municipalities or are performance. We node smart from in of revenue creating customer shut update volatility. Markets on continue planned to Adjacent as with revenue making Oil our interest see utilization ocean by by sales our to will revenue in any believe more for throughout over yet only Our in translate overall levels OBX report ever set future persist period. smart strength Aquana provide adds of of will services of We infrastructure infrastructure. updates domestic water segment XXXX requiring the and revenue impact is and the segment market foreseeable our X-month pre-pandemic customers their positive year greater remain contracts our either & cables strong sector, trajectory company's their demonstrations bottom increased diversification conditions and latest record. greater segment meter technology it's new should It OBX increased remain growing half connectors, strategic demand believe quarter figure Furthermore, achieved efforts our rental generating bottom second from the that for translates further the leverage another Mariner will of off our this This generated rewarding to fiscal year. quarterly and will greatest projects firm represents our beyond upward and Moreover, this to and water stability evidence of the meter first improved such fleet. We an Gas into offerings. Driven field ocean anticipate this have for are the these reliable these underway, deepwater

quarter the of fiscal Quantum small in segment. year Markets of our amount second half reflected The a first and from only Emerging revenue

see offer for previously However, and contracts, defense with significant turn contract to this current detail acoustic Ongoing arrays undisclosed now our to pleased capture on announced group. and companies give hold a second energy performance. efforts an the on call future unique as that, and the with well monitoring we're discussions carbon major segment. With utilizing of to quarter as DARPA smaller service over SADAR the contract backlog Robert related for to this developing contractor, analysis, providers for future financial the I'll also promise more potential

Thanks, morning. good Rick, and

net I XXXX, to that of we this our revenue $X.X revenue during for $X.XX call I'd last of net or reported XX $X.XX compared ended to quarter $XX.X remind Before share. begin, or press or will year's diluted the million last specific diluted $XX.X to we million compared provide our $X.X release, share any everyone year's quarter loss second like of guidance was earnings March The not revenue yesterday's morning. In million income million. per per

million reported $XX.X the revenue to XX, million year. of For of ended $XX.X revenue months we X last March XXXX, compared

share diluted X-month of was loss this net $X.XX per Our last or million $X.X diluted share. or $X.X to year's $X.XX net compared income period million for per

an revenue March million Oil Our XXXX. of XX%. X $XX.X the compares Gas for ended of the revenue with of market the XX, This fiscal same months period $XX.X & million for produced of segment year, increase prior

this For The partially products. revenue segment our periods by X-month higher of in a X-month our the the are was decrease due to million, fleet our increase rental seismic for higher period, in utilization for XX%. The wireless $XX.X and demand of and period sensors. contributed an versus increase offset X-month million revenue OBX in demand $XX.X revenue increase at exploration X-month for

as is revenue segment follows. Markets Adjacent Our

increase million, our second products. Imaging in of meter product million, the over are Industrial Our revenue fiscal the sales connector year $XX.X and to is higher over Both $X for was compared million. when for of XXXX. The of XXXX. of to $X.X million sensor of revenue the $X.X X-month period quarter due increases X% revenue imaging revenue the products XXXX higher XX%. in for and of quarter XXXX revenue quarter fiscal to the same second second product year's year period industrial demand the industrial products period increase cable million, same for fiscal our water was a compared is increase X-month XXXX products for revenue for an XX% XXXX year an $X.X last

Markets this the year was recognize quarter to in to period period this of in compared a expect our for portion was third for we compared revenue fiscal to begin Emerging Markets segment X-month for for in $XXX,XXX fiscal quarter Emerging the XXXX. segment The XXXX. The currently same $XXX,XXX Finally, second and of segment year to $XXX,XXX XXXX backlog, for the from revenue the $XXX,XXX $X.X has in revenue same million the XXXX.

decrease measures quarter year. year The this is Excluding of noncash the decreased liabilities or XX, first fair the for we $XXX,XXX XXXX. cost-cutting earn-out for or X% quarter began March result that ended fiscal decreases operating our both in our the fiscal our to for million X-month the X% period expenses in by value by periods of XXXX, $X and second contingent recorded expenses operating of in

our $X.X investments and plant cash million. rental fleet X-month into and Our property, equipment were

at Our balance cash quarter of cash second $XX.X end sheet the equivalents. the reflected million of and

XX, of liquidity Our March $XX.X our Thus, credit XXXX. borrowings total of available million is facility has as $X.X million.

our are third We expect further report complete also a happy expand quarter facility fiscal that will for to liquidity. our negotiations available credit we during to new

Lastly, discussion, clear and back any we world that to I'll the concludes my holdings estate around own and turn in the real free leverage. That Rick. are and without Houston call

right. you, All Thank Robert.

fruit. in noted reduce financial efforts are bearing expenses As our to Robert's outline,

liabilities, of activities. We operating and our to advantage positive ] And and the of profitability this path in adjustments cultivation we Looking the management, expenses reflected rental these balance first fiscal continue and Pinemont year. shareholder primary for market expect X% savings added past yield campus last by through through now is company's year's last results the operational compared strong our completed, believe the in returns. sheet non-cash a to will OBX [ conservative of to with reduction our move to operations half that year earnout

Todd So to questions this back concludes our our prepared listeners. call for commentary. And over any I'll turn now the from

Instructions] question first comes with & [Operator Cabot. Our from Moors Scott Bundy

a before year-end, product? couple of interest Mariner -- questions, Rick, will you to that components you do just the In enough -- Mariner event have there the if the deliver in quick is please.

those, But that supply enough to deliver have work chain We to going well are that out that. we're try we to to and pursuing quantity, avenues shorten on there working reasonable issues but some actually there that. a be that for are some are put delays components might of

that's of yet seen. some So to be

you as an of insight provide to give And department's the be? regarding where any us Quantum, what there are, might applications to this interests going? what idea Just might be can defense

et But assets some that Well, need making the for monitoring with our any of to And DARPA some certainly concerns of be they there. respect government cases, be. real where I to contract and are security the specifics our -- waters, clearly, some it's into can't in that the get defense some might littoral sure levels indicate of what the cetera.

it believe that are our several technologies So but provides can't that into I places it's that useful, get in specifics. they monitoring really really intelligence that and

[Operator from Instructions] comes Tieton Dezellem Capital. with Our next Bill question

it that a to and DARPA is follow Or a is full-on contract last implementation? have question, it's Is something a solution for I'd may. I on that they whatever test? actually application, the determined up so good like if

ours trying to provides a to that. is DARPA offering situation always businesses like technology basically they're a demonstrate solution and to show where opportunity Well,

combinatorial it's the at both can well a showing technology perform there's a product certain level So as as of function. aspect actually that

of those really aspects. it all spans So

actual answer really that's a the and implementation? it's that -- test both an So of both

is Right, endeavors. DARPA any typical as of

further So then, me step this if let one I may. take

applications. if contracted Defense really anticipate they or move in that forward, works. additional So you familiar contracts with had the not that I'm a different Would way? they that military that sees of mentioned or would sees you process do DARPA under multiple the would be it that Department how that

agencies direct under don't applies. a and as defense DARPA not Well, would That's DARPA be with It what those military would it it think is. go a agencies just contract. really U.S. more of involvement I

then for you leads an me here. dynamic And your with expanding facility, the that seeing you jump I up? credit going a especially let seeing cash the side are moment. that's financial What mean we're that to to interesting

aspects to more credit interesting new borrowing facility to other happens Well, It our us. to this makes expand just availability. there's that also it

future. We also we be the that don't things additional liquidity that's going to having are somewhat and that on, activity with excited by occur anticipate could the helpful in

activity that that you potential the levels will see that if just great I you need facility, an be may expanded Is right? So credit so you heard correctly?

historically own able think own cash And been Well, these that in think really generate if that on large you flow. And besides Bill. But I able that activities, your that stuff. something our Bill, on a the our find many sense. things comes from is facilities and planned are make to -- cash the in that, that it's have not contract insurance considered that credit there's commentary. something I policies it's sure contracts you big if my even just have or to back want comes pocket -- in man in cases, in to always Robert we're

other mentioned aspects besides please? Would also size, you what it were are, interesting. there that that Robert, you increasing some the the those were then to of highlight And just

Primarily have our to access in current we what cheaper cash than facility.

always aren't rates they? are good, interest Lower

sir. Yes,

mentioned the to relative of in not you update please an there? larger Could release. give So PRM pieces press us was business,

active with are XXXX with fall for ongoing still talking begin still respect potential not would are about see immediate then any we Discussions activities XXXX, certainly contracts future. tenders to don't but years in the thereafter. deployments, PRM, likely that in but They're could that in even into and

be certainly just in on the represents not more contemporary and pipe. than information anything that piece there's news of might that things So a much that not really,

going developing be I'm then may, would question, market Quantum and take is And step the may some please kind back. at I'll I various talk detail in that capture, to and how you you of one to addressing? relative then if angles more Carbon that

of be a the I'll say. developing about in to there monitoring. capture, way you economic very terms are really, in has oil the you're gas sell resource be done it's producing you're it's thing -- very to fluidly, effective and because exploiting a not like The got market. Well, that very can In you sense, it that carbon in when

whether with marvelous So it to following low capability respect the it's plans really area where it's But predictions capture. happen big-ticket have is cost a transport, being these and as to carbon it's capture other through needs precision. associated to of needs has be your of components it what to we of in monitored, not major with some be your understood things. capture, There's at into carbon we with lots fit of once actual fully the monitoring sequestered, monitoring is meeting and ways captured. That the

array sensors You can money monitoring But sensing in very or you can use might sensors, analytics. we either with low-quality our high of have lots see that spend techniques forming distributed it with type doing of lots type you and acoustic very capabilities applications. precise

there. So [ that's where we bill the ] fit

from Dennis with question next Capital. Rutabaga Our Instructions] [Operator Scannell comes

quarter. Nice

do business? curious, how X, contracts? Are the much me. I'm of future strong for you you looks forward, good obviously Just half kind again, first far fleet the about, have in in with Rick, think rental year. just X-month these pretty of typically, fiscal Just that? your that things visibility on how of a see your that I of can your curious been utilization said you going couple

full of these see in contracts foreseeable future. But the in interests that scramble Well, see companies these believe conversations the some that's into that rest a the year, and coming this our is of up I at in it's are doesn't the to have that oil to going In that cases, contractors that quarter future, near the XXXX to question, good many some in extending projects on and they're for. We looking are we utilization wanting round fleet future. having far this that the rental they're certainly into mean, one for board are of terms do with for be to really now. real

Some underway have more contracts of already these been than X for year.

on the years. activity So for as there's other this this it's and considerably, up like these to of liable board parts on is come other contracts picking where world looks carry

as a is right just am there? this And reminder, I primarily marine,

Yes, it is.

-- perhaps I maybe then, you quarter, the first sorry, you did think did And fleet, in year your fleet another to during investing -- adding the call the rental discuss $X the come Or or about million if we've that? something memory look depends it done $X It are that serves. how that or like doesn't to thinking million, on yet. Is market? we I'm

but that were. were some, cost because things added in works as partial have some at We we better already progress probably had it

design come. already some some some And as I some definitely of of and/or that, you issues. with mentioned, to is Mariner chain somewhat have in mitigating there are out. able finding we've to being inroads our components are get to We risk But made these respect mentioned, yet that components issues. supply at there

to come. So that's yet I think

We is. will still always It will be market driven. cautious. be It

place new And so we're committed looking our rental fleet. definitely circumstances going to for assets to be in

question. I obvious then just, think, And an

Oil Gas the was the in segment, & recognized So million that gain $X.X correct?

the segment. was I in think it corporate

corporate. of Part

That even model look better. makes my

back further or have turn to closing I'll And questions the queue. remarks. any at floor for in Wheeler Rick additional over no time, this we

today. thank our that Well, our right. forward everyone call again XXXX. of speaking year thanks conference look Todd, All joined We you, for to and the to fiscal you quarter third to for call

goodbye. So thank you much, and very

Conference Geospace Technologies Thank conclude today's you. Second Earnings Quarter Call. This XXXX does

have and wonderful a at time, disconnect may your line You this day.