GEOS - Earnings call transcript Q1 2020 | Geospace Technologies Corporation

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Operator

Welcome to the Geospace Technologies' Second Quarter 2020 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; and Mark Tinker, CEO of our subsidiary Quantum Technology Sciences.

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 in been listen-only following At opened for Instructions] [Operator

Rick turn is floor It pleasure you to my over begin. now to Wheeler. Sir, may the

Rick Wheeler

Thank you, [Brie].

Geospace to Robert Financial year. second Officer; fiscal conference call Rick and Chief Curda, Executive Wheeler, Chief the I'm welcome quarter and for our by of the morning Company's Officer. Technologies Good and joined XXXX I'm the Company's President

are we our and mentioned, overview In to subsidiary have us in-depth of as addition second call Robert an CEO Tinker, pleased give some first commentary Quantum with quarter Mark then of the give Sciences on Technology will performance. today. our on the I'll financial

give our an Quantum U.S. Mark with the discuss to recently Patrol. contract I'll in Border opportunity Following awarded that,

Finally, open a we’ll remarks the and line I’ll then few questions. make last for

defined Reform present about uncertainties or Some forward-looking expenditures. factors considered actual of Private other as and our operations are markets, including These are affected comments outcomes control the while and statements we XXXX, capital statements Litigation predict. based may today's the can't recognition, planned of on in awareness Securities revenue product, by be Act

XX-K performance risks XX-Q to can forms Both imply known and filings. unknown what undesirable differences results we Such and and lead in uncertainties SEC discussed our or risks from today. or say include those

listens Relations the may to information one convenience, of recording discussed For on and at is this geospace.com Investor morning time-sensitive accurate replay. not the page a website. we will that this link our the call be Note time the of

for fiscal XXXX market closed, ended we March results our quarter second of XXXX. the year Yesterday, XX, released our after financial

pandemic very world. second little upon has safely entire thankful devastation the which are with COVID-XX thrust about brought quarter we very transpired by health enormous economic our the mentioned, and As commercial disruption and that

secured smoothly are ingenuity operations preserve am I exhibit our remarkable critical how that and to as a as infrastructure. our designated safety and as as in protocols. customers government maintaining compliant possible, supplying the impressed U.S. by continue while as efforts courage role to strict with our have thoroughly critical sectors manufacturer multiple efficiently ongoing employees Their

primarily our ocean-bottom for demand second marine delivering Total quarter last nodal systems. As ongoing our fiscal well revenue cases $XX.X revenue than million was year's X%. we quarter, quarter fueled as reporting by less by reported second our recent first in both as matched of

non-recurring compared throughout of primarily profit fleet. either quarter is the $X.X a decrease periods of and gross due reflects cost However, to million second upgrades to for we prior mentioned in made rental the OBX

Despite the X doubtful XX% the in customers. periods the year's our increased accounts for million March six and fiscal a second and $X year a by of associated first lower months and of both XX, profits for are in write-down to OBX ended receivable second quarter XXXX X-month the one losses result the rental largely Note that reported XX% with account months. the of to net the gross gross six first of revenue quarter, XXXX compared respectively for last profit

a initial to of in included Our account. negotiations revenue we revenue. payment pursue financial the the continue reported system to on non-current customer An sheet $X the is and this from Not deferred recuperation note with have been land instruments sale note the intend million within promissory a million with this payable recorded XX of on promissory million deposit on full plus $XX customer totaling secure payments our of GCL reporting in our secured debt, monthly $XX.X installments. and balance received

this payments, promissory but likely. collection later note is to to of intend current revenue we a recognize determined customers the the be The at date, no its on when

months three generated demand for segment market in lower higher and systems. is X% the OBX XXXX. This of marine March offset compared result ended to demand products, by our gas and oil sensors period equivalent decrease combined nodal the the million for our revenue year-ago XX, traditional Our of slight $XX.X marine of partially

six $XX.X partially XX% million, generated rental For systems our March of months traditional The increase year's and for demand XXXX, mentioned XX, demand this X-month land is last as by but ended primarily over for marine seismic increase the in products. segment of growth the same result period. lower OBX an is our offset

this XX% segment and respective three six $X a and for respectively Traditional decreases same million seismic periods of XXXX $X month year reflecting million and for of March for ended XX, generated the the products periods XX% revenue on ago.

continue reduced As and by to oversupply declined dispute oil the be these Saudi in approved reaction impacted. seismic the brought by to on pandemic noticeably demand COVID-XX global destruction likely between crude products a will for combined negatively with prior products the to had and companies, COVID-XX of levels generated for already given the oil exploration Russia, gas oil of demand and these result as for Arabia demand recent

products coinciding These wireless systems. to For Interestingly, year-ago the price OBX increases $XX.X reduction slight the and are three generated has XXXX figures the March ended a and six million approximate month of for rentals response COVID-XX and XX% experienced in increases and the compared of seismic equivalent respectively, pandemic revenue $XX XX, volatility. when our XX% periods stemmed The our oil with demand from periods. only of million greater equipment OBX respectively.

risk been reported. or that other major cancellations to duration occur delays was rental request of to systems in new or And have intending contract We contracts. utilize projects rental quarter on scheduled however postponed. Future provide quotes third our cancellation no also OBX delays, date, indefinitely receiving we continue short fiscal our to to know one might face

year. is of fewer for In last of periods periods ended million and Our the our to reservoir X respective This XXX,XXX and borehole and the six million periods revenue sales to services products. produced March both three decrease of compares seismic revenue products six and month XX, the XXX,XXX three for month XXXX. and X.X due

the or monitoring for PRM We this believe in for from generating that meaningful reside future significant permanent opportunities systems. category reservoir revenue truly product contracts

have we also made We fiber with both have of combination acquisition in likelihood of PRM contracts PRM receiving such the technology manufacturing by our engineering extensive optic improvements optical and greatly our we sensing our OptoSeis to believe and increased product. electrical

these clients We with are interested interruptions in deploying while discussions in years. coming systems called temporary multiple the clients have some open Because carried dialogs for of have COVID-XX, on in in others of unaffected. discussions PRM these

three certain These our For respective month X% six production year Unexpected million ago. slight segment for of from totaled XX, revenue both market XXXX X% to amounted periods. and represent delays the and when decreases adjacent the equipment compared decreases and of $X.X ended imaging periods periods the from million respectively. in the our figures March one in $XX.X

In six addition, the month lower decrease sales over of film contributed to period. products the

sales market nurturing that our the oil was periods our segment. and cable to reliable higher the offsets products connector is in generating expanding of with volatility decreases stable the meter means Partially both and adjacent and provide strongly market our offsetting gas segment revenue associated of strategy We working and of products. water our of believe sound

depend these likely the result those spread products to this so for such on restrictions in commerce. Note graphic in functions certain have lower will COVID-XX imaging of gatherings related an as been such that of and for activities of combat things attended in curtailed and on Many our customers these demand events, products, largely other effort are long effect.

XXXX. ago. Our XXX,XXX XX, a month the compared That's year segment and the and periods six XX,XXX ended three March emerging generated and XXX,XXX in periods revenue market of for XXX,XXX respectively to equivalent

are to sale The attributed a customer. of border increases to and perimeter security the commercial products

portion a may occur was provide U.S. most a for million of Even Customs ago, announced the solution and Department the Border from with Border contract to the we year an contract and As our a reminder, the Quantum quarter just over advanced until technology subsidiary U.S. fiscal of Patrol though Homeland Security. $XX month revenue awarded that Protection first not our the XXXX. to significant

our set contributions that This the both strategy in bring first first calculated to is markets. key of this into We believe of just contract technology Quantum. an diversified of leverage the technologies to this unique our our competencies believe our this and acquire will a demonstration validates future. and is beginning of We expanded rationale core

let I'll and give point, Robert this takeover more At some financial detail.

Robert Curda

Thanks Rick, morning and good everyone.

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

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

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

oil A our product revenue gas breakdown as of is follows. and

million, revenue products $X demand last of XX% $X Our traditional traditional demand lower our was revenue and our the for for a attributed decline lower million second revenue to seismic decrease quarter The sensor of product compared for year. is marine products. to

products. also marine of products product $X.X months was year. seismic due demand lower to This sensor a million in for $X.X revenue compared of decrease last XX% for of is Traditional six decrease XXXX the traditional revenue million, period's to

revenue last Our was wireless of of the compared year. XX% million for quarter increase product revenue an million, $XX.X $XX.X to

same million, in six due revenue of increase marine revenue for rental the demand of OBX utilization XX% and year. months higher compared our period $XX.X systems. for both $XX for an nodal product last fiscal periods million was is to The of to revenue Wireless increase

product note. Second wireless million secured million a by delivered not revenue in the GCL include a $XX.X quarter $XX quarter promissory second does in product XXXX sale

our in obligations. cash and received of payment as the million deposit recorded cost pleased associated received long-term revenue. note for of am we the long-term The sheet As revenue with to to-date and been payments note have XX, deferred is our current of on XXXX, all I on balance in monthly of of customer. deferred March part customer have payments revenue sale cash part $X cost from

our product not year recognize revenue is probable. of three-month plan the OBX six-month Due of transaction concerns wireless fiscal note periods collectability and from revenue rental $X.X marine we collection the and revenue million of customer, revenue also the of our to We include promissory XXXX. of and revenue determine on million does when – $X.X cost of seismic for to this

business. customer In November, ceased its from the will a and this debt continue recognizing until normal service us of course practice can owed in to revenue XXXX, we customer this

of decrease the year. quarter the $X the year. of revenue $XXX,XXX, Our revenue second to XX% months million compared of reservoir to was last XX% decrease compared for was $X million last of product product a for revenue $XXX,XXX, a Reservoir six revenue

decrease our for reflect three-month monitoring unless and products a these expect for service meaningful are of and not contract permanent system. a in we borehole of The tools. from and the the engaged until do period six-month reduced delivery sales reservoir revenue We

not PRM do to year related recognized discuss but with products expect customers, to any XXXX. continue PRM fiscal We multiple in revenue be

into the X% market revenue in year revenue at meter quarter of product XXXX second connector sales are our second cable XXXX increases increase $X.X and fiscal an quarter products. period higher of of XXXX. six-month of adjacent over increase million, same water for revenue for period product to of Moving both Industrial our product was segment, industrial over the $X.X XXXX an year X% due our the fiscal million,

equipment six-month product revenue to is XXXX year certain product in production of The when the period last the production imaging million, $X.X certain of of imaging fiscal year's for is sales film million. second imaging quarter compared compared by XXXX. in decrease decrease X% revenue Imaging a in is lower decrease decrease revenue for was delays caused The due delays a This equipment. $X.X products. or products XX% in to revenue million, $X.X same to and for

second for and the period was XXXX. Finally, the quarter XX, ending for and XX, the the ending $XX,XXX revenue period XXXX. segments, market from Prior six-month March March emerging revenue $XXX,XXX totaled three-month XXX,XXX $XXX,XXX year for our six-month for

from do While our with we revenue significant Quantum quarter the from of recently million Border XXXX. revenue to $XX fiscal year our most Protection XXXX, announced Customs we do not and contract year in first U.S. anticipate in contributions expect fiscal record of

XXXX. million same year debt XXXX by $XX.X charges We pursue the mostly quarter is for million $X increased year owed intend collection six-month all by increased quarter XXX% or and amounts million or period of when fiscal The the fiscal of compared an XXXX. second to of operating account. increase $XX the rental related XX% operating expenses in period the to Our six-month of customer. expenses compared three-month second operating customer due and the The to expenses to bad to OBX by

property, investments and into in our cash fiscal were million and into equipment six-month our equipment million. investments respectively. Our and expect any investments $X.X million not rental additional cash could do $X.X to We plant equipment $X plant our XXXX and year up rental property, fleet cash be significant and into

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

We have and agreement $XX.X million. credit no borrowings our debt long-term available the outstanding under is

in In world any addition, that free and Houston leverage. we the holdings are and owned clear numerous real around estate owned without

turn the my and discussion, back That I’ll concludes call Rick. to

Rick Wheeler

Thank you, Robert.

Quantum him and introduce our to about a you Dr. And of Mark contract. Mark. words recent to ahead Go let I'd Sciences subsidiary now Tinker, and few CEO our Technology Quantum say like

Mark Tinker

Rick. for Thanks the you, Thank introduction.

Tinker I Technology It nearly Rick I feels only on Quantum everyone the opportunity has CEO Sciences. Quantum been since minutes. two am As I said, years appreciate Dr. to of though like it the and Geospace the am acquired even two address Mark call.

to business efforts. expected integration Over the two in years the past addition

serve We and gas. is This core can the organizations. have technologies both markets spent resulted unified offering in and of significant oil integrating a outside competencies of time that

a revenue As products the year $XXX,XXX quarter XXXX. perimeter the of XX came from customer. XXXX Quantum ending fiscal and generated sale for of the $XXX,XXX previously March revenue This six-month noted of second of period to security commercial in

cannot our $XX U.S. for we to were U.S. field. agents in capable for million we announce and honored Patrol I enough other and the contribute X, are able with contract Customs provide is to U.S. a the of trafficking into contraband pleased reducing out solution Patrol. gratifying and Protection very of XXXX, the how Border the be stress illegal drugs challenging mission country. weapons, April to deeply Border On of a to satisfying Border to a It

than And the validates took acquire strategy longer while Quantum. management it to contract Patrol Border first desired, Geospace

and In but border fact, not for up of we us other future the pursue combined to patrol additional value efficacy unique believe contracts, further our opportunities. also doors allow will open technology only

Rick. you, Back to

Rick Wheeler

Thanks Mark.

by in months. recent thrust to seen are the challenges and combined and steps discipline The virtually confident all maintain revenue oil are upon in have Arabia past times. unprecedented we our has prices commitment new initial all contributed industry the pandemic adversity, facets we helped both historic Russia troubled each COVID-XX expand the into Saudi between really financial of strong drop now that worldwide diversify disputes this to with the taken, us navigate markets, in and our these have steadfastly streams Despite to and

products strategy highlighting is Quantum recent to technology generate our them. U.S. $XX the awarded innovative example, Department revenue execute and the And subsidiary by to from Security Homeland million the can of just one our contract ability we diversifying our our successfully of

and uncertain our hard We our all I action for sincerely to to support decisions strategic times. thank their future. us and and working on loyal will continue good of very position employees, through for a these of progress and confident course I'd feel difficult that like shareholders have Lastly, favorably the made valued clients

With back that, over the our remarks to this questions. call for I'll Brie concludes now and prepared turn

Operator

Tieton go first We will Instructions] Bill with Capital. to Dezellem [Operator

Bill Dezellem

advantage a take this, Quantum of I'm few questions. to Since on the line you're going and ask

$XXX,XXX to agency to country, of it it U.S. of outside revenue you or of in helpful? or all, revenue whether additional Would whether you private, the would quarter. be government First that was what type referenced detail talk was any was the the

Mark Tinker

the preserve and not to market undue of and some fact of don't are the you very we anonymity feel security adversary surveillance as and technologies being of expect the gratifying, also – being you, in answers our talk to the only might advantage. security some our any challenges nice Bill. for used of – is, to the and sir because want of have my their give that, Part customers. But purposes, we Yes, to

who customer But which United component customer. still their has security that an integrated purposes entity, was large mission to becoming this to they are providing and own integrator overall their system we the States, end, that system of particular are a – within for commercial an a own

Bill Dezellem

government would private customer be their business? a And a or

Mark Tinker

U.S. customer Their user. it's in a end but example, ranges, for government this particular

Bill Dezellem

And what end additional about information can that you share user?

Mark Tinker

I can't non-disclosure with we’re under a strict pretty them.

Bill Dezellem

mover. for And is phrase Understood. $XXX,XXX maybe better meaningful And size certainly then this any because lack you security anticipating of are isn't revenues final purchase should I decisions year? nice, needle of a that qualify guess border Mark, I but a further it of, in

Security? So Homeland really more something meaningful the like

Mark Tinker

to Yes of not No Both you, can I it actually. efforts, see that deployed the those integration while of nature, of both and substantial not be efforts. roll border starts well, we are to security. are integrated get these larger in meaningful hit then it's completely building but system that it's somewhat to analogous doing only get let what me and something on kind contracts and contract, with we're agree of deployment a but get to take more a larger for to towards

the to it desire future. specifically, answer to your Patrol in Border question support to our upcoming But with and absolutely intent efforts the is continue

Bill Dezellem

do a So, additional opportunity business you have reasonable to you're announced that meaningful have this thinking year?

Mark Tinker

United the involved, for particular of have, just program program item a a – I announced. department. it to likely I don't us. within that to nice thing of want record. a there far to This is is nice name, the a States say up A This What’s I'll because the that stand happened say win is budget a but for record not year Patrol is Border able go is, big and line probably can't not everybody is is

everybody's stood to purpose and happy goal. to and that are shows intent up continue towards work it we that common because march to see forward And

driving So because meet to to their that means is and for working us needs. it can keep hard see, optimistic we

so, ability and we in a see we're nice when a that always able and when towards program And has customer who that. that kind see to a need a has of goes it's desire customer, always record of also

So the years extend going future. of many to is into this record for program

have would we in serve that year. But starting And so, occur doing everything of continue can them we to every the next years. upcoming not to likely fiscal until intention

Bill Dezellem

here to something walk going that I'm ignorance who am record the that So Would not Mark, intimately? my expose with. is those are that I you familiar to us just have identified of not program you concept of the significance through of please for

Mark Tinker

Yes sir.

Bill Dezellem

Understanding how the government works?

Mark Tinker

element Absolutely, so and from specific all it's what housing record established whether within government and name down, trickle States they within down program as budget. have United department States United DoD you into And a called lines. fall into The program Congress every budgets to the line those the way are numbers the are it can development. of

a a so, authorized definition and used. specific Congress with place And it's for appropriate be both funding specific to to

you it's there see can record a to behind and of commitment complete a States a because is the encouraging government they program satisfied. you go United that something that intending from as go federal see When contractor, are to be

there They push such us as put physical things entry. have to might hey, ground. into that that to elements for encouraging to as support was big Border ports Patrol of the their imagine, They agents. So says wall for see the is line have a you

All to their to have They Patrol the needs specific these go for things a into funds meet they fall those which budget massive logistics, then with. within missions. of assign deal specific amount move, have and a Border they

established, us XX we're the last big been within a provide one satisfying and the it to months. win technology that so, occurred for now has that our was And into

going us to little that was portion So the to it's go about go they're for mission on took mission all that clear, longer not their satisfying that a part program along a compete others of and to record do be us. to of happen reason, it's they of to we're funds, that see for funds to get going that. those to The that want crystal about contractive I because apply that it intent

Bill Dezellem

you. Thank

solution I'm I understand segue a that going as it I time up as what is here segue mean we was read due taking an Grande actually use least to the for open RFI the Rio didn't waterways to for so great was a we lots And for Border use this water appear address in to example? more due XX that and apologize where was February at particular looking a was of like a Patrol

And III. talk though then you looked when criteria, you the you opportunity, would that granted fit number one? because number to And as criteria that SBIR all, the looking much at please it of Phase two, were

you correctly you fit – have you, we requirements If government obligates Phase III are buy do that understanding do the status? to that the this because from

Mark Tinker

that's to ascertain them a a really non-committal with for from let And from sequence. everybody out the then coming Information. good call is set for according to Request to them best for We that strategy It's else completely learned formulate industry my – Bill, gather RFI government the be in available, familiar might and address a do they what and the to solutions were industry. from for to what me requirements question. in intimately RFI information an procurement request

can it our which a with cost source technology, sole delay happy, because requirement. they us with particular intimately The you can the contract. from aspect mean to its SBIR is But avoid government to. get complete serves competition, able get SBIR non-committal. what stress to again, That us. did which them if means money is them that I means of award waterways make the a buy aligns procurement. familiar to not then it RFI are obligated When that into status, both are does and They we is and a But respond a what very

nuclear we everything don't, get aware of particular we we are that the past our Force with in sure to this way, might center. And Air if that deal our in fit labs and the past good weapons make they do we a had So, with power the Air we've requirement out with distant leveraging success in that of Force research capability. this our both with but

were read press As able you do the Border with Patrol. we contract to in this release, for it guys current the

On engage requirement. Patrol make would we we further something to aware sure on are solving very the approach are that particular waterways how that and excited Border they is of

Bill Dezellem

commercial an your Okay. to year And where gas. of over this I'm use revenue if original more integrator. systems turn going about just and it then pulling is the the working going and description ask of one the out someone about Would example may, the take integrator, then be an question say example and be relative secure XXX,XXX to I to else - military But would I'm installations? to question to us systems the who to I'll oil this quarter Raytheon and

And Raytheon so, to an are example to you'd military. then referring selling Is selling be of be that the who here? to you what

Mark Tinker

an of to. I'm that's example referring exact what Yes,

Operator

is with line Chris, Sansone go Chris open. Advisors. your Sansone to [Operator Instructions] next We'll

Chris Sansone

what's did the model one that the I business? So have for side, question revenue on Quantum

Robert Curda

It's to get $XX million.

Chris Sansone

Okay.

it's there one-time recurring is that? So of any is a nature sale to a

Robert Curda

goes. contract the what press extensions Well, mentioned as for far was sure as to are possible that there part the established, it's release. as far as that's in the But

Chris Sansone

right. Okay,

that from no service So there orders? could those stream those revenue from we is ongoing servicing expect

Robert Curda

that not address a if amount. be might some can Mark going be huge like, but to it's Well you'd there

Mark Tinker

and of of moment. course potential in one, case for nothing this contract there maintenance Yes, service for any is is the there potential but in the that follow-on and

Chris Sansone

Quantum's sense market what any be total the have we do the opportunity addressable for - And what products Okay. might be? for market would

Rick Wheeler

have easily we have very has that industry a that past. Well, the and and with, is innovated I we our solves it's serious as as problems. large it been oil in think very gas fertile think business like doesn't This out it what some products come and

of past. - we our big we hard - in at been has into I our have mean anticipation that least market as it something but So that measure as it's every and grow can gas oil this size, to expected

Chris Sansone

have put when the - so did Okay, great. them? Quantum place And they and time, you of stations some to back in last then, long it replace period go we how was for

Rick Wheeler

Mark, that. do you answer want to

Mark Tinker

now do I prior data what mentioned were been able the we really with one desperately Is acquired on Geospace geophysical capabilities systems. our and together. of Sure, to working was they needed being things deep acquisition intimately what we've and of what to maturity about bringing as Chris hardened that Quantum

that So on you they put in place the literally XX have systems XX,XXX for miles consider PRM depth bottom Geospace’s when have years. here, ocean operational in of that been

does and operate me a such deployed meantime gives can That that customers will now to very confidence degree that - deploy as get a of it that's we systems impressive. our with failure

in So I fully five, or are most of anticipate - XX-XX system. hazardous place expensive might four and are the be part the the in that operational that our less that systems will and conditions be years the parts actually more disposable

serve a long our going mission anticipate for I time. to extremely systems So are

Chris Sansone

the gas much. very to And million. revenue should excluded I'm How expect revenue coming you then $X.X the oil we much curious I to thank more potential Okay, about excluded switching in quarters? and guess of see

Robert Curda

couple that that not our at completely ongoing We're really because point, working this on can days are happening every this basis. answer I negotiations of customer. customer with I'm sure an with

Chris Sansone

Okay.

we're - look that? was this potentially those is that revenue? two any numbers deferred - was was $XX if written So that another at not there to it’s million say it total excluded, revenue off if of So - be on it is $X we could successful million $X safe million versus of of

Robert Curda

incorrect, No, incorrect. that's that's

because doesn't it $X was customer and November. back we in this on revenue million exposure recognizing stopped Our expand

on is payment. late differential that unrecognized the So revenue and charged late penalties, and we've fees customer

Chris Sansone

exit stations we many did OBX Okay. quarter the with How stations?

Robert Curda

I stations XX,XXX believe.

Chris Sansone

stations for said, much year, is to guys be investment in not the you the like of And going Okay. balance the that? more of

Rick Wheeler

and not that that the to fact, release even in first the qualified in But we have reported not significant of some we that We Chris, six most any first anticipate, it within year. Had right spent what of that don't you of that now. I done would fleet we know quarter technologies. press going expenses did that this the was upgrade with getting upgrade we're equipment of mentioned as we No that our forward. months, work some current that for in did

this short to qualification around one-time for were in a utilized equipment take this a has magic sort be some increasing I technology rapidly But some at some of of into of As all if these the to not upcoming that happens so, levels, we’ll allowing blows this them and these jobs. we're bring rental up planning to any been higher upgrades open and changes consideration. while time. event and of new on that, fleet course them investments of pretty mean,

Chris Sansone

mentioned okay. utilization. Right you year? you the then visibility do balance - What the utilization into for rates utilization for of have And

Robert Curda

Well, a say we've the the contracts, and we're had speak. been only we that's the in based in said, oil cancelled. gas even far contract commerce, on we've as and We I prices. one instability out don't thus or had quotes contract new lot, as pandemic have the small disruption given for would we but And putting

Rick Wheeler

at the OBX I been. longer reason that our from mean, use companies, I - But least oil that we very at time, really a being question, that's what many be that, Chris. tell the is that would it's can we air within the because is that a can anticipated so can not on much being as might as plans we this juggled is you out of answer accurate more are disruption, control. but see for And the term one now far But in elements in good you we all right there balls Yes, there think goes. point give has have of

aspects their of So longer their what towards they're extent to to term future. that looking extent,

I the that occurred. think that some even our elements in it's huge, have of immediacy some though mitigates of

Chris Sansone

switch just I before right, Right, over comment debts the of having we're on CapEx the issues to the uncollected one that receivables. some bad or with

you us? think the I'm production bills. end customer so the they're the that user a their a with chip major, blue Why paying sure being is would it company. I'm or if isn't paying You just our that exploration offshore customer bills, paying is have end customer curious

Robert Curda

more bills. than those their paying to blue chip cases, Well companies flow And cash aren't particularly extent respect a with flow that those are that in downhill to has others. some customers restricted some

you you're more would be you been would the wouldn't necessarily occurred has in from there considerable squeeze that the parties believe but that that think case, a that that circumstance, case. So has right, be would that

Chris Sansone

what and control again? that do prevent have to we happening from Right

Robert Curda

Near zero, that, and problem I mean, independence amount part is is of the of industry it's disarray of the and the the within organized a way there contractors. certain

case houses consistency if just the come the the there another that great more and been that true. oil no get could, there's The issues. finger set these different companies years one just assurances, The not be own and library yet really have issues. has exists better over would So but consistency their necessarily it It have that of was point about. way be their at then to for contracts

Chris Sansone

Thank you. of is you million Can the And then my $X talk CapEx. geared what non-sensor last about that's towards? question

Robert Curda

right? CapEx non-sensor equipment property speaking and you're think not to plant, and about improvements I

Chris Sansone

Yes.

Robert Curda

part and Yes, we're and development as facilities of initiatives just things our do our year equipment manufacturing to adding research improve to updating of we've like, efficiency. that to the decided our and this things additional

Rick Wheeler

So believe. it don't five. wasn't I

Robert Curda

but year. We million up to spent $X.X could this million $X FX spend we

Rick Wheeler

is X.X. our spend Right, current

Chris Sansone

right, guys. All thank understood. Okay, you

Rick Wheeler

Thanks, Chris.

Operator

We will Dezellem Bill a follow-up with Tieton take Capital. from

Bill Dezellem

question. I'll that the you. actually thank bait take Yes, on last

CapEx So is for upgrade to opposed to need given difference down pressure. What it would and it’s zero? that as between X.X million shedding, under and X that that gas how is your to you oil leading million to the just plant business

Rick Wheeler

Bill, to cases together, to put the our it certain means improve the even consistently that have get been. trying with products we're and out has down they automation to In with the bringing do Quantum for up various processes we certainly through have we of what need many costs bring in manufacturing, machinery cases Well, further than to to-date. our

as far margins products that in helps with volumes. As certainly even on goes that lower

that not we it's reasonably up spend future, but to that that under purposes. spend could we those we that will that are examine towards as circumstances necessarily elements So cautious match examine those and the

Robert Curda

watched we any on won't that cash that. certainly support income certainly cash have flow to we'll flow forward, watch we've expend Yes our going any cash always and money won't and improvements

Rick Wheeler

Right.

Bill Dezellem

bit now. of have it your out that you spending would question, good a why the was managing I asking seems And job character done That's part seems it cash historically. you a of cash that is the be

that this I could interesting shed that? there is the you light some maybe between business that hoping on with lines CapEx, So read associated and some

Rick Wheeler

pertinence improvements, business forever mean, how examining commitments timeframes on I The our day. customers, we've there's span in investment. interesting a seriously of very at in always look with mean, those and over I Well that this expenditures. the but stuff, which honestly, that's quite we return those that the based operated on

changing would be any the we're spend And don't we dime. of that, another that not so, one really outcome

and not or those and other The certainly oil potentials these in adjacent even of adjacent customers just on some But within having lists we're markets there outcome our our within Quantum our markets, depend just other markets, discussions are gas. with of customers. various would emerging segment it's

just want you're aware things we sure make to are those So of. that

Bill Dezellem

is And Quantum call? earlier in and Mark spoke then how the this to business potentially much tied of some that the of of

Rick Wheeler

of probably think as needs of those I smaller and We're pretty already not bullet We're up a product. versed acquisition just what are and Well, portion and maybe the critical proof hardware sensors reliable it. that extremely Mark producing of sort thing. its majority it, indicated. crucial in And Quantum set well to and seismic well even

making But became some upgrade. sensors aren't it going the to be other areas. certainly Other aspects I that part, expenditure, much with there for if capital cables think respect to these be we would necessary, all require that it but and machinery necessarily and could will most

Bill Dezellem

where the of big that how was he Border I then and Patrol I That be helpful. the about was understood prior And questioner asking part could going. if is

question is The going be a densely slightly maybe ask how is where I'm So border for million not much to There might that but that populated be miles tunnels distance. $XX would of important. all border, of different. thousand couple

for are about distance we much how So $XX talking million?

Rick Wheeler

something to discuss? is at you're liberty Mark, that

Mark Tinker

do contract our not for is our thousand to yes, am do answer I for question, for not want a have supplying there disclosed. is completely I but application Bill's particular of to technology we which liberty at my border. best And Bill. miles Yes,

because not to specifics. more frustrating go some into it's to so able me for of And that, be

go cannot I exactly, you addressable I into the tell can't secure the but the application which specifics the market threat. for about by distance that are total can't particular there and, So, of you decree, my get for going then because to I we talk to

What is Border what the this and them, the the and years. of is to forward further I for every go will This hoping, this I'm you of to iceberg tip taking Patrol. the looking technology initial that we intention into have fiscal deployment tell with continuing upcoming

Bill Dezellem

you. have a I'm with to fun going little So Mark,

Mark Tinker

Okay.

Bill Dezellem

addressing So application for total addressing be this the application, are a, you amount distance of a large a this really $XX or million of it. a will small that undisclosed with portion

so, follow-on more lot future we application, expect shouldn't a for And this but applications?

Mark Tinker

going this I'm and I'm understand, exact having an I think I I but first properly. make sure give to you answer to so, do

We and that for. and Border total to our to are become actually for currently be compete available going serve of are we Patrol we're addressing X% market of unknown share to What going market. the is able

Bill Dezellem

for border? this U.S. And available application is – of closed that the Mexican of market. is market or that total available Is the X% the

Mark Tinker

application. This

Bill Dezellem

Okay.

other border whole XXX% So of discuss? another an miles get if then to add to you pie would we additional a the for would application that be were that

Mark Tinker

you waterways. exactly was That's earlier correct. And that the already mentioned example

Bill Dezellem

different would application, a that buyer. be a different And

Mark Tinker

sir. Yes

Bill Dezellem

exciting. extraordinarily That's

the for for take to this So how years application, to application? would long have how Patrol this if them many it Border their fulfill wish, were current

Mark Tinker

if I I'd boy, ball, really, that really had be crystal happy. Oh

meet up As don't And giant – facilitating leap their don't that this don't will have to record go ball mission. of particular I forward up program ability are a a it if is they to record degree the stand of mentioned before, forward. program that's it. crystal the But this in meeting stood been was they have you meet to intension for and go I it what the you significantly

Bill Dezellem

large I'd was thank an application. integrator this is circling one back The And of a bigger That to be some helpful then comment long business actually to piece like test end would if is goes this that that of test anticipate question how then then customer to could for that is switch your and would be? you. implication And being How the there done. business. the more you systems well, test,

Mark Tinker

the to or per test. in Test take of overall the have a mean They Test definition means mutually together. I'm out integration on a for little se. going engineering are prime. of doesn't twist bit the They tasks effort. failure

completely that it overall establishing. the we case. system fail, made of an that anybody have if And security had this get We would in we expectation and component far could there they was a but are the are not

I go, So it's on of understanding going to of overall the be and that engineering have of a kind system. more test completing of And future them. behalf reasonable long a for customer, this their the the can where haul it's of

beyond year beyond but So horizon goal. slowly to and well we’re for into increasing revenue the here, stretch end that it's five us towards out going

year and ago, I was this [ph]. would unusually you have to it unexpectedly domes about me for left significantly years, five a ask question If but even this would said, don't worry

we're go they and are integrating and but So fact I'm them want not to what and them anybody that it's very still to don't from now, It's do with the positioning slow. positive saying what or four nuts need with now. they I in doing right three progress. now years we're

Bill Dezellem

Does hoped for imply that they are the preparing have that contract win? this integrator won or a has they future for a

Mark Tinker

It's for them. a highly likely win

Bill Dezellem

And lead unfolding? does up that Quantum burst end will of once an actual becomes assuming so or win, that that to how this it a business for does,

Mark Tinker

wins. we're we're Because what all operating mindset predicting change under today. the won't of It

Bill Dezellem

the for you time. Thank

Mark Tinker

bet. You

Operator

queue it are at any no closing further for time. questions turn in back I'll And to speakers the this there remarks.

Rick Wheeler

forward the well, for quarter you Brie August. thanks to you We of today. conference look third joined speaking our call with be fiscal will and thank which right year who on All to call our everyone XXXX, again

good and again, you thank So bye.

Operator

time quarter This and second conclude earnings XXXX disconnect today’s lines day. call. Geospace at a your Please does conference Technologies have this wonderful

Geospace Technologies (GEOS) 8 May 202020 Q1 Earnings call transcript