Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
GEOSPACE TECHNOLOGIES REPORTS FISCAL YEAR 2022 THIRD QUARTER RESULTS
Adjacent Market Business Segment Marks Quarterly Revenue Record
Houston, Texas – August 9, 2022 – Geospace Technologies (NASDAQ: GEOS) today announced results for the third quarter and nine-month period ended June 30, 2022. For the three-months ended June 30, 2022, Geospace Technologies (the “Company”) reported revenue of $20.7 million versus $23.1 million for the comparable year-ago quarter. Net loss for the three-months ended June 30, 2022 was $6.6 million, or $(0.51) per diluted share, compared to a net loss of $0.8 million, or ($0.06) per diluted share, for the quarter ended June 30, 2021.
For the nine-months ended June 30, 2022, the Company recorded revenue of $63.4 million compared to revenue of $75.4 million during the prior year period. Net loss for the nine-months ended June 30, 2022 was $14.8 million, or $(1.14) per diluted share, compared to a net loss of $9.0 million, or $(0.67) per diluted share for the prior year period.
Walter R. (“Rick”) Wheeler, President and CEO of the Company said, “Although the three- and nine-month periods ended June 30, 2022, experienced decreases in Oil and Gas Markets segment revenue from prior periods, we are nonetheless pleased that demand for our OBX ocean bottom nodes continued to climb. This led to the highest quarterly figure for rental revenue this fiscal year. Further evidence of this growing OBX demand came in our two recent news announcements of separate OBX rental contracts, valued at $4 million and $12 million. Moreover, the base value of signed OBX rental contracts so far in fiscal year 2022 now exceeds $24 million, compared to $8.2 million in fiscal year 2021. Our discussions and ongoing quoting activities with valued customers give us an increased level of confidence that demand for the OBX will remain strong.”
Wheeler continued, “Another noteworthy highlight of the quarter is the strong performance of our Adjacent Markets segment. Quarterly revenue from this collection of products reached an all-time high in the third quarter, setting a new segment record. Revenue growth in this segment has benefited from growing demand for our U.S.-manufactured water meter cables and connectors, driven by increased domestic infrastructure spending on smart city projects. Our presence in this market is poised to penetrate even deeper with the roll out to customers of our Aquana smart water valves and cloud control software, expected to occur before the end of the fiscal year. Additional factors contributing to solid Adjacent Markets segment revenue include our Exile electronic pre-press solutions. These computer-to-screen printers bring increased automation and time savings to the graphic arts screen print industry, helping these customers reduce labor and increase efficiencies. Our specialty contract manufacturing business is also seeing positive results, where more customers want increased domestic control of their manufacturing.”
“The past two years have been plagued by COVID-19, supply-chain issues, and geopolitical turmoil. While many derivative challenges of these issues remain, we are encouraged by the improved market conditions in both our Oil and Gas and Adjacent Market segments. Continued improvement in each of these divisions should lead to better performance in future quarters as well as overall improved liquidity. In closing, I would like to thank all our hard-working employees, valued clients, and trusted shareholders for their continued support.”
Adjacent Markets Segment
Revenue for the three-month period ending June 30, 2022 was $10.9 million, an increase of 16.7% when compared to the same three-month period of the prior fiscal year. Revenue for the nine-month period ended June 30, 2022 was $28.3 million an increase of 18.6% from the same prior year period. The increase in revenue for both periods is due to higher demand for the Company’s water meter connector and cable products, industrial sensor products, contract manufacturing, thermal imaging equipment and consumable film products. The Adjacent Markets segment contributed 52.9% of the Company’s total revenue for the three-month period ending June 30, 2022.
Oil and Gas Markets Segment
The Oil and Gas Markets segment produced revenue of $9.5 million for the three-months ended June 30, 2022. This compares with revenue of $12.6 million for the same period of the prior fiscal year, a decrease of 24.8%. For the nine-month period ended June 30, 2022, the segment contributed revenue of $34.3 million, a decrease 17.4% from the comparable prior period. The decrease in revenue for both periods is due to lower wireless product sales partially offset by higher utilization of the Company’s OBX rental fleet. The Company’s OBX rental fleet has been experiencing higher levels of quoting activities as well as additional contracts. The Company expects higher levels of utilization of the OBX rental fleet throughout the rest of fiscal year 2022.
Emerging Markets Segment
For the three- and nine-month periods ended June 30, 2022, the Company’s Emerging Market’s segment generated revenue of $0.1 million and $0.6 million respectively. For the similar periods from fiscal year 2021, the Emerging Market’s segment produced revenue of $1.1 million and $10 million, respectively. The decrease in revenue for the three months ended June 30, 2022 was primarily due to lower service revenue.
Balance Sheet and Liquidity
At June 30, 2022, Geospace had $9.1 million in cash, cash equivalents, and short-term investments. Additionally, the Company has additional liquidity from its credit facility with $8.5 million in available borrowing. The Company also owns unencumbered property and real estate in both domestic and international locations. The Company used $6.6 million of cash during the nine-month period ended June 30, 2022. Notable sources of cash included (i) $7.8 million in net proceeds from the sale of short-term investments and (ii) $5.9 million from the sale of used rental equipment. Notable uses of cash included $13.3 million used in operating activities and $4.1 million of investments for additions to the Company’s rental fleet.
Conference Call Information
Geospace Technologies will host a conference call to review its third quarter fiscal year 2022 financial results on August 10, 2022, at 10:00 a.m. Eastern Time (9 a.m. Central Time). Participants can access the call at 866-342-8591 (US) or 203-518-9713 (International). Please reference the conference ID: GEOSQ322 prior to the start of the conference call. A replay will be available for approximately 60 days and may be accessed through the Investor Relations tab of the Company’s website at www.geospace.com.
About Geospace Technologies
Geospace principally designs and manufactures seismic instruments and equipment. We market our seismic products to the oil and gas industry to locate, characterize and monitor hydrocarbon-producing reservoirs. We also market our seismic products to other industries for vibration monitoring, border and perimeter security and various geotechnical applications. We design and manufacture other products of a non-seismic nature, including water meter products, imaging equipment, offshore cables, remote shutoff water valves and Internet of Things (IoT) platform and provide contract manufacturing services.
Media Contact: Caroline Kempf, ckempf@geospace.com, 321.341.9305
Forward Looking Statements
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “could”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or similar words. Statements that contain these words should be read carefully because they discuss future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information. Examples of forward-looking statements include, statements regarding our expected operating results, the timing, adoption, results and success of our rollout of Aquana smart water valves and cloud based control platform, future demand for Quantum security solutions the adoption and sale of products in various geographic regions, potential tenders for permanent reservoir monitoring (PRM) systems, future demand for OBX systems, the adoption of Quantum’s SADAR® product monitoring of subsurface reservoirs, the completion of new orders for channels of our GCL system, the fulfillment of customer payment obligations, the impact of and the recovery from the impact of the coronavirus (COVID-19) pandemic, our ability to manage changes and the continued health or availability of management personnel, the impact of the current armed conflict between Russia and Ukraine, volatility and direction of oil prices, anticipated levels of capital expenditures and the sources of funding therefor, and our strategy for growth, product development, market position, financial results and the provision of accounting reserves. These forward-looking statements reflect our current judgment about future events and trends based on currently available information. However, there will likely be events in the future that we aren’t able to predict or control. The factors listed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K which is on file with the Securities and Exchange Commission, as well as other cautionary language in such Annual Report, any subsequent Quarterly Report on Form 10-Q, or in our other periodic reports, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Such examples include, but are not limited to, the failure of the Quantum or OptoSeis® or Aquana technology transactions to yield positive operating results, decreases in commodity price levels and continued adverse impact of COVID-19, which could reduce demand for our products, the failure of our products to achieve market acceptance (despite substantial investment by us), our sensitivity to short term backlog, delayed or cancelled customer orders, product obsolescence resulting from poor industry conditions or new technologies, bad debt write-offs associated with customer accounts, inability to collect on promissory notes, lack of further orders for our OBX systems, failure of our Quantum products to be adopted by the border and security perimeter market or a decrease in such market due to governmental changes, and infringement or failure to protect intellectual property. The occurrence of the events described in these risk factors and elsewhere in our most recent Annual Report on Form 10-K or in our other periodic reports could have a material adverse effect on our business, results of operations and financial position, and actual events and results of operations may vary materially from our current expectations. We assume no obligation to revise or update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable securities laws and regulations.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||
| Revenue: |
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| Products |
$ | 13,463 | $ | 17,679 | $ | 48,060 | $ | 66,005 | ||||||||
| Rental |
7,228 | 5,404 | 15,322 | 9,430 | ||||||||||||
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| Total revenue |
20,691 | 23,083 | 63,382 | 75,435 | ||||||||||||
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| Cost of revenue: |
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| Products |
12,460 | 12,907 | 37,310 | 47,492 | ||||||||||||
| Rental |
4,580 | 4,549 | 13,909 | 14,744 | ||||||||||||
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| Total cost of revenue |
17,040 | 17,456 | 51,219 | 62,236 | ||||||||||||
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| Gross profit |
3,651 | 5,627 | 12,163 | 13,199 | ||||||||||||
| Operating expenses: |
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| Selling, general and administrative |
6,373 | 5,243 | 18,108 | 16,075 | ||||||||||||
| Research and development |
4,108 | 3,658 | 14,050 | 10,943 | ||||||||||||
| Change in estimated fair value of contingent consideration |
(384 | ) | (795 | ) | (5,042 | ) | (1,713 | ) | ||||||||
| Bad debt expense (recovery) |
88 | (40 | ) | 116 | (32 | ) | ||||||||||
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| Total operating expenses |
10,185 | 8,066 | 27,232 | 25,273 | ||||||||||||
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| Loss from operations |
(6,534 | ) | (2,439 | ) | (15,069 | ) | (12,074 | ) | ||||||||
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| Other income (expense): |
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| Interest expense |
(26 | ) | — | (26 | ) | — | ||||||||||
| Interest income |
402 | 151 | 722 | 1,284 | ||||||||||||
| Gain (loss) on investments, net |
(4 | ) | 1,727 | (22 | ) | 1,996 | ||||||||||
| Foreign exchange gains (losses), net |
(341 | ) | (49 | ) | (230 | ) | 64 | |||||||||
| Other, net |
(3 | ) | (8 | ) | (21 | ) | (3 | ) | ||||||||
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| Total other income, net |
28 | 1,821 | 423 | 3,341 | ||||||||||||
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| Loss before income taxes |
(6,506 | ) | (618 | ) | (14,646 | ) | (8,733 | ) | ||||||||
| Income tax expense |
68 | 169 | 170 | 288 | ||||||||||||
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| Net loss |
$ | (6,574 | ) | $ | (787 | ) | $ | (14,816 | ) | $ | (9,021 | ) | ||||
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| Loss per common share: |
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| Basic |
$ | (0.51 | ) | $ | (0.06 | ) | $ | (1.14 | ) | $ | (0.67 | ) | ||||
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| Diluted |
$ | (0.51 | ) | $ | (0.06 | ) | $ | (1.14 | ) | $ | (0.67 | ) | ||||
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| Weighted average common shares outstanding: |
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| Basic |
13,013,616 | 13,353,254 | 12,977,146 | 13,464,177 | ||||||||||||
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| Diluted |
13,013,616 | 13,353,254 | 12,977,146 | 13,464,177 | ||||||||||||
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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
| June 30, 2022 | September 30, 2021 | |||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 7,468 | $ | 14,066 | ||||
| Short-term investments |
1,598 | 9,496 | ||||||
| Trade accounts and financing receivables, net |
26,400 | 17,159 | ||||||
| Unbilled receivables |
— | 1,051 | ||||||
| Inventories, net |
18,868 | 16,196 | ||||||
| Prepaid expenses and other current assets |
2,614 | 2,062 | ||||||
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| Total current assets |
56,948 | 60,030 | ||||||
| Non-current financing receivables |
306 | 2,938 | ||||||
| Non-current inventories, net |
13,992 | 18,103 | ||||||
| Rental equipment, net |
30,910 | 38,905 | ||||||
| Property, plant and equipment, net |
27,835 | 29,983 | ||||||
| Operating right-of-use assets |
1,011 | 1,191 | ||||||
| Goodwill |
5,072 | 5,072 | ||||||
| Other intangible assets, net |
5,911 | 7,250 | ||||||
| Other assets |
411 | 457 | ||||||
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| Total assets |
$ | 142,396 | $ | 163,929 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable trade |
$ | 4,163 | $ | 6,391 | ||||
| Contingent consideration |
168 | 807 | ||||||
| Operating lease liabilities |
237 | 225 | ||||||
| Other current liabilities |
7,744 | 7,799 | ||||||
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| Total current liabilities |
12,312 | 15,222 | ||||||
| Non-current contingent consideration |
— | 5,210 | ||||||
| Non-current operating lease liabilities |
836 | 1,009 | ||||||
| Non-current other liabilities |
16 | 31 | ||||||
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| Total liabilities |
13,164 | 21,472 | ||||||
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| Preferred stock, 1,000,000 shares authorized, no shares issued and outstanding |
— | — | ||||||
| Common Stock, $.01 par value, 20,000,000 shares authorized; 13,861,233 and 13,738,971 shares issued, respectively; and 13,019,241 and 12,969,542 shares outstanding, respectively |
139 | 137 | ||||||
| Additional paid-in capital |
94,276 | 92,935 | ||||||
| Retained earnings |
57,694 | 72,510 | ||||||
| Accumulated other comprehensive loss |
(15,377 | ) | (16,320 | ) | ||||
| Treasury stock, at cost, 841,992 and 769,429 shares, respectively |
(7,500 | ) | (6,805 | ) | ||||
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| Total stockholders’ equity |
129,232 | 142,457 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 142,396 | $ | 163,929 | ||||
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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
| Nine Months Ended | ||||||||
| June 30, 2022 | June 30, 2021 | |||||||
| Cash flows from operating activities: |
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| Net loss |
$ | (14,816 | ) | $ | (9,021 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Deferred income tax benefit |
(12 | ) | (3 | ) | ||||
| Rental equipment depreciation |
10,500 | 11,332 | ||||||
| Property, plant and equipment depreciation |
3,112 | 2,956 | ||||||
| Amortization |
1,365 | 1,299 | ||||||
| Accretion of discounts on short-term investments |
89 | 45 | ||||||
| Stock-based compensation expense |
1,342 | 1,510 | ||||||
| Bad debt expense (recovery) |
116 | (32 | ) | |||||
| Inventory obsolescence expense |
2,310 | 1,702 | ||||||
| Change in estimated fair value of contingent consideration |
(5,042 | ) | (1,713 | ) | ||||
| Gross profit from sale of used rental equipment |
(10,801 | ) | (6,546 | ) | ||||
| (Gain) loss on disposal of property, plant and equipment |
(9 | ) | 6 | |||||
| Realized loss (gain) on sale of investments, net |
22 | (1,996 | ) | |||||
| Effects of changes in operating assets and liabilities: |
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| Trade accounts and notes receivables |
1,455 | (4,621 | ) | |||||
| Unbilled receivables |
1,051 | (1,561 | ) | |||||
| Inventories |
(1,705 | ) | (4,920 | ) | ||||
| Other assets |
(250 | ) | 6,756 | |||||
| Accounts payable trade |
(2,223 | ) | 1,372 | |||||
| Other liabilities |
215 | (4,080 | ) | |||||
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| Net cash used in operating activities |
(13,281 | ) | (7,515 | ) | ||||
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| Cash flows from investing activities: |
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| Purchase of property, plant and equipment |
(913 | ) | (2,451 | ) | ||||
| Proceeds from the sale of property, plant and equipment |
9 | 3 | ||||||
| Investment in rental equipment |
(4,121 | ) | (1,528 | ) | ||||
| Proceeds from the sale of used rental equipment |
5,929 | 9,994 | ||||||
| Purchases of short-term investments |
(450 | ) | (10,844 | ) | ||||
| Proceeds from the sale of short-term investments |
8,224 | 1,100 | ||||||
| Proceeds from sale of investment in debt security |
— | 2,069 | ||||||
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| Net cash provided by (used in) investing activities |
8,678 | (1,657 | ) | |||||
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| Cash flows from financing activities: |
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| Payments on contingent consideration |
(807 | ) | — | |||||
| Debt issuance costs |
(211 | ) | — | |||||
| Purchase of treasury stock |
(695 | ) | (3,588 | ) | ||||
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| Net cash used in financing activities |
(1,713 | ) | (3,588 | ) | ||||
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| Effect of exchange rate changes on cash |
(282 | ) | 144 | |||||
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| Decrease in cash, cash equivalents and restricted cash |
(6,598 | ) | (12,616 | ) | ||||
| Cash and cash equivalents, beginning of fiscal year |
14,066 | 32,686 | ||||||
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| Cash, cash equivalents and restricted cash, end of fiscal period |
$ | 7,468 | $ | 20,070 | ||||
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| SUPPLEMENTAL CASH FLOW INFORMATION: |
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| Cash paid for income taxes |
$ | 168 | $ | 284 | ||||
| Issuance of notes receivable in connection with sale of used rental equipment |
11,745 | — | ||||||
| Inventory transferred to rental equipment |
1,194 | 3,777 | ||||||
| Inventory transferred to property, plant and equipment |
172 | — | ||||||
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
SUMMARY OF SEGMENT REVENUE AND OPERATING INCOME (LOSS)
(in thousands)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||
| Oil and Gas Markets segment revenue: |
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| Traditional seismic exploration product revenue |
$ | 1,592 | $ | 1,950 | $ | 3,428 | $ | 3,736 | ||||||||
| Wireless seismic exploration product revenue |
7,233 | 9,628 | 29,467 | 36,137 | ||||||||||||
| Reservoir product revenue |
692 | 1,071 | 1,422 | 1,671 | ||||||||||||
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| 9,517 | 12,649 | 34,317 | 41,544 | |||||||||||||
| Adjacent Markets segment revenue: |
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| Industrial product revenue |
7,465 | 6,451 | 18,471 | 15,835 | ||||||||||||
| Imaging product revenue |
3,473 | 2,922 | 9,841 | 8,033 | ||||||||||||
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| 10,938 | 9,373 | 28,312 | 23,868 | |||||||||||||
| Emerging Markets segment revenue: |
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| Border and perimeter security product revenue |
135 | 1,061 | 571 | 10,023 | ||||||||||||
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| Corporate |
101 | — | 182 | — | ||||||||||||
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| Total revenue |
$ | 20,691 | $ | 23,083 | $ | 63,382 | $ | 75,435 | ||||||||
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| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||
| Operating income (loss): |
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| Oil and Gas Markets segment |
$ | (3,695 | ) | $ | (1,807 | ) | $ | (6,209 | ) | $ | (13,258 | ) | ||||
| Adjacent Markets segment |
1,841 | 1,997 | 4,341 | 4,819 | ||||||||||||
| Emerging Markets segment |
(1,405 | ) | (4 | ) | (3,609 | ) | 5,286 | |||||||||
| Corporate |
(3,275 | ) | (2,625 | ) | (9,592 | ) | (8,921 | ) | ||||||||
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| Total operating loss |
$ | (6,534 | ) | $ | (2,439 | ) | $ | (15,069 | ) | $ | (12,074 | ) | ||||
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