GEOS - Earnings call transcript Q1 2021 | Geospace Technologies Corporation

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Operator

Welcome to the Geospace Technologies First Quarter 2021 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 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 open for to to It's the my Instructions] pleasure [Operator floor now over Rick Wheeler. turn you begin. Sir, may

Rick Wheeler

welcome Thank Geospace call and year Technologies quarter to XXXX. you, first morning the conference Good fiscal Aaron. and for

Tinker, can Robert As Officer, first Chief follow our of by Mark give few joined the Mark an the company's the answer. overview of and After Financial is I questions performance. some Rick first Also last CEO on Robert quarter commentary the us President for company's Technology I'll and we'll open Wheeler, I'm Robert, Quantum line I'm mentioned, will and Executive in-depth with remarks a Officer. Sciences Chief with that financial and our Curda, Dr. subsidiary.

uncertainties undesirable what other include or lead and today's can unknown performance factors Some operations to in our risks actual discussed are Both those and predict Private Act our while Litigation imply outcomes Reform statements considered we filings. in markets, present by based defined are risks recognition, be control. XX-K including and product or from today. or the of XX-Q These we known uncertainties say differing Such forward-looking results awareness, statements cannot Securities capital and about expenditures. revenue Forms XXXX, may of SEC on as affected comments and planned

in replay. and the and listens a the accurate time year one which that Yesterday, closed, quarter XXXX released information first encourage Relations of December website, results for page not For Note, recording I this and at time-sensitive we this fiscal and XXXX. recorded to Investor may financial the be visit the to after our ended XX, it our convenience, of market the the morning discussed we will call link on everyone geospace.com browse.

pandemic the generated that XXXX exceeded first to have our had There of quarters and revenue despite year reported months year, on were the recorded three events continues negative in the noted, figure in seven quarter COVID-XX highest and business in the segments, This the first we the $XX.X also fiscal As revenue achieved total that impact pleased the reached moreover each fiscal we to several notable our quarter. years. million. previous in were occurred first-time report four of

from of common derived manufacturing secured purchases seismic revenue and Products relation our our and and the marine oil Border X,XXX U.S. The competencies to reach fulfillment yet, of first, subsidiary, time of central for purchased along fleet, combined Technology Sciences which High was with highest made In segments these marine actionable OBX rental data generated true customers shares seismic our market our segment. The company a entirely and by Solution. which for our markets our that was nodal engineering the up marked We in in first from focus a quarter information. makes which gas contractor segment first our revenue another In stock emerging large system a in acoustics ever, one Technology XXXX, and The from of core of market technologies first This electronics and Protection also first related of system. the markets. segment. Border believe tangibly OBX quarter Quantum continue our create broader Border strategy sale meaningful November more clear $XX.X with a included $X.X in this disciplined market of to million April was contract and Security with will XXXX. demonstrates The we revenue emerging repurchase revenue first, utilize variety its a of large occurrence real emerging analytics, value, from into proprietary to U.S. provide exceeded Customs noting the ocean-bottom value with Patrol the recording in notes markets deepening under announced million. market for first-time real company its our strategy. our advancing diversification new and adjacent program the accomplishment during from figure on a international

XXX,XXX December company for shares XX, $XXX,XXX. a aggregate an amount market of on As open the purchased had the of XXXX, total of

this program At Our value he now to more to turn of this provide returning one can the point, execution are we that call so some implementation just financial I'll and our over is way detail. shareholders. more Robert,

Robert Curda

good Thanks, and morning. Rick,

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

contingent is traditional seismic $X lower same in did three-month marine decrease The liabilities our year ended XXX,XXX OptoSeis, repairs similar the adjustment. acquisitions of and is revenue first a our period provided to due our contain A Quantum as XXXX revenue breakdown The customer, equipment seismic compared quarter traditional million the gas product our revenue the not a for of XX% benefited whereas a million, period customers. our prior products, of of product was value year XXXX net related December to oil reduction and fiscal demand services the and support decrease $X.X follows; of of XX, of to in year. earn-out of for fair from revenue last to

today. levels exploration seeing low are continued activity products these and increases until lows expect for historic services, the demand we We from of seismic

central quarter increase was in to the for The rental year. due an million lower million is XX% of related the contractor. revenue product to was of $X.X conversion into the to increase partially a of $X.X by of wireless This last rental rental OBX nodes. XXXX an revenue notes revenue million of sale sale $XX.X Our reduction in in seismic equipment due of a a the sell utilization and international rental the OBX electronic fleet, our contract to rental revenue offset compared

demand during for and year rental We our demand expect oil reduced fiscal gas. lower for our products utilization due of lower wireless and XXXX, global to fleet

revenue for million promissory a year fiscal second we a XXXX reminder, a have sale, quarter in secured by not note. $XX delivered of fiscal As the in recognized product million GCL year $XX.X XXXX,

XXXX, December $X.X from in received million for cash and interest of we XX, payments As principal our customer.

revenue revenue to obligations. all We determine cost cost been associated of our current to revenue. continues profit. remain revenue and customer of note balance when deferred with revenue as we part sheet deferred payment the received and the recorded cash payment recognize this of the collection have sale plan Our long-term and for on cost on transaction of long-term the promissory of The as

and in to do services permanent of a due XXXX, engaged a monitoring reservoir we product tools the in of We oil reservoir and of company's scale delivery Our from on a year. received the of last declined rental revenue terms was expect large compared for decrease quarter we've September conditions meaningful presented these to borehole demand first until a from Reduced bid $XXX,XXX $XX,XXX, bid not repair the for revenue the provide for decrease the are project revenue. our gas engineering producer. In sale, in XX% for PRM are responsible products a system. the revenue unless of We request system by to the major contract on and to customer. and a

issues us lead We contract. customer do will and from it providing discussions to know resolve to the resolved We with of a or not system. borrowing if award whether have be will these these continued the when the issues PRM

to have continue PRM discussions other producers about major We systems. oil and gas with

Moving segment. to adjacent markets product

$X.X $XXX,XXX sell products emerging effects compared sporting of most imaging concerts. period of the contract first social these higher U.S. COVID-XX the product $X.X a for our we in with fiscal to pandemic. prior reduce from the in prior are from demand the revenue will connector for is recovery products. to industrial in to first compared and not $X.X using fiscal and in gatherings for and of last manufactured recovery for the quarter a the cables We products million of believe meter segments period million do XX% to on was result demand patrol from quarter incur we year. effects services. for conferences, of there our a consume not is the revenue encounter We the increase revenue equal the The these products These revenue products this XXXX. market gatherings or April border product the these for of Recovery year same Imaging same marks continue obligations Revenue is water of for that quarter manufacturing of an events a COVID-XX Our return is fiscal large of increase the was the until service. XXXX the million, signed The to completing to the virus due the believe demand revenue contract like increase year. related the year's for our revenue that revenue see of will million. $X.X and first until increase of

technologies expect complete our with significant seismic to provides currently believe Quantum acoustic have analytics contract We contracts. the XXXX, developed fiscal to our any future although, year we by do capabilities that contracts, lead of will innovative we the not remaining during data additional advanced the in obligations subsidiary customers

The gross compared million profit OBX to manufacturing the profit to U.S. These partial factory contract. equipment the to lower sale consolidated patrol of equipment, rental were of productivity our was GSX quarter gross OBX border X:XX:XX], increase our the $X.X [Indiscernible and and by lower million utilization our for unutilized large the offset in first completion last costs. and of the rental due partially increasing transactions $X.X was year. Our

Quantum into research fair million. related The for a and year decrease first acquisitions, operations. reduction XXXX. personnel decrease the and and began first related cash XXXX, XX% our liabilities investments $XX.X The three business our to expenses OptoSeis a Year development fiscal a for quarter costs earn-out result to million in of equipment to program general a $XXX,XXX. XXXX in and cost project when are business of fiscal decrease decrease in operating plant fiscal year year $X.X months a the is XXXX reduction that compared in Fiscal of of property costs expenses This non-cash contingent reduced value is is

as be be fiscal Investments million will could rental warrants in unless XXXX fiscal new much the We XXXX. plant for $X to fleet minimal rental as fleet. expect year year the into contract and capital property our investments additions equipment

own $XX.X sheet under the of Our credit $XX.X no had at outstanding long-term equivalents. borrowings We reflected in cash any the the turn We December our real XX, numerous estate agreement available was my balance call concludes million. Houston XXXX, million owned to cash world that and free I'll and debt around are leverage. and back Rick. That clear discussion. without holdings and

Rick Wheeler

able energy many our many consequence over including a the companies, year we've The is remain normal the is ahead gone on believe reactions that havoc right, energy direct this for jeopardizing of with A still past yet All its path year near-term will the of it prevent Renewable though, some A new COVID-XX. wreak will health COVID-XX provide you, by that now to assist the reduced pandemic once customers. spread. to will in a needs. unrealistic thank and since us recovery seen national fiscal attempts hopeful they Therefore, reduced fraction emerging and the be a is as economies do the XXXX, The earth And disrupting anxious the for to time Robert. other of is world in whole to we successful mankind persist today challenges demand began after of year to is vaccines true some normalcy. contained. society's of undefined. rendering take COVID-XX to demand is these that will

for and a quality demand especially market where demands we recovery in new growth full from and required existing tasks, fidelity oil return subsequent these seismic products energy imaging However, are highest suited and segment require ideally and The exploration in oil gas resources. our the for services a servicing offer the gas of will renewed reservoirs better primary data. and

Aaron means a focus, In the and by normal COVID-XX not brings and in features with of certainly solution pandemic. liquidity growth we debt industries. a resume the the the us back skills questions. a to now broad bring As I'll our will and economy before. market success. a the we zero Geospace prepared city give the adjacent adjacent novel on technical market illustrated of security new border cost. company controlled have and been markets the of to fiscal path incorporated by engineering we expect ample with our conservative And quality products XXXX our deep keep sheet innovative ramp leverage the turn in over seen rapidly fully patrol. to up, essence, accomplishments us evolves and are range facets and balance experienced prior to to is convincingly That the products The very is its management solutions strong our technology perimeter very that of our call segment and We our the for tightly ahead manufacturing which statements, extensive end more towards our to to border capabilities trending these U.S. and in technologies us believe a providing anticipate in year, challenges and This

Operator

[Operator you. Instructions] Thank

Dezellem from Bill Tieton first Capital. with question Our comes

Bill Dezellem

circumstances you. I'd purchasing if OBX, questions. the rental of with I like start that Thank we Would equipment? you could, customer to a your group please. the led But to have discuss

Rick Wheeler

that our purchase, that's Bill. using embed of the our facilitate towards sales. for some the some of our offer incentive fact for under an sorts and rental of Sure, duration, contracts Throughout time the in customer significant accrual contracts contract we had in rental OBX. This to that been equity and those work projects length

sense to take purchase rental and and units. go had a them extended for of Just for length option contract ahead in customer your expectations their made to that these and exercise that had rented of time it times within

we OBX this dominant for have units. led Given may that the exploration years seeing that now, forward. reservoir monitoring, in an to has probably of three marine a But completely that and not these of we taken projects and them unexpected the some the larger amount where more role buy been what of more see is is essence, going

Bill Dezellem

has their purchased, the contractor compared that what And does this to that been how XXXX of on does notes how projects? using they many

Rick Wheeler

They than more are overall. using that,

I one think crew. It's they also have OBXs. more utilizing than

as is still just is renting crew of one those this some So other one units contracts and that well.

Bill Dezellem

you. Thank Great.

to that in on. if release to me anyone shift, I bid press bid did - said guess I may of did the that not noted Let that I Did Relative PRM. that bid the business? on you you piece you RFP, bid not else

Rick Wheeler

based not I based NDA with particular its our and our discuss our position. am really we decision But on entered liberty company. merits certainly, oil that own to really on into own at that, just

Bill Dezellem

that's that Let for Do might and your why an as with still me them? customer question are there a you. a way with you conversations ask be in feel answerable that though continuing is opportunity

Rick Wheeler

exactly these conversations. we is opportunity and certainly there are why believe still there's Yes, we that having

Bill Dezellem

about And PRM fields Great. are about compare is And oil that you in Would under close to or your comment release those genuinely a us discussions how contracts of making level conversations? you. or relative company talk an relative the RFP other when to to end decision? with. year they to the really you Thank

Rick Wheeler

the these see the until that expect see it, being earliest. XXXX, here think as examined probably would sorts I to not Well, deployed, systems fields that we are of at

suited and time be are designed fields well that terms in. The for contracts here these discussions these they're interest. having come being systems we're not on But So solicitude We're as looking encouragement. point these an get discussions. discussions discussions, quite have to imminently these anticipate that's you the and deployed take with, always to happen the discussions just don't to we to are know, but high any forward, so to randomly to some and of these based

Bill Dezellem

hoping a believe made that states And release contracts. a jump around remarks to if I additional definitive Thank specifically then will press so reference I commentary opening to statement, little fact you. and this Great. that Quantum, am me I The for lead the let please? Will more is may. to pretty Robert's

Rick Wheeler

that. Well, jumping is border excited speak we're the let some let to words very Alright. get sure bid doing about what patrol. am to me I actually Mark the since he he at for is

Mark Tinker

Good morning, Bill.

Bill Dezellem

Good morning, Mark.

Mark Tinker

closely, be to this this in about shaking at we're the and is new right tracking from and from confident cycles, able I'm standpoint deployed on administration on what effort. downstream excited I But through security to extremely going FY schedule we're well a we're so follow we're that of we far. see time we've global Yes, adding that this, value we're to as for And work. what work appropriation cost that right budgeting 'XX looking we'll how light of do so and received, in pretty a out pandemic. on We're think these

Bill Dezellem

yesterday, is was on that one not fact, understand believe and, disruption I the you of that Security favorable? hope disruptive of now contract having that and permanent Homeland I'm so I Head us a would that of a be the And trying removes our of would confirmed. that. completed? significance relevant this have that to when outside those new to is guess, Is the awarded Security that in distraction Or factor Homeland Head be another

Mark Tinker

it's I'll two has thoughtful good give a Yes, to question. you perspectives. try It a answer.

environment, trickle themselves, and have be secretaries, and working challenging Border can to first within because a of going, us. underneath The don't can Patrol, fluid the a stable such acting mean, them Customs individuals the that and for we down Protection, department. coming I I can leadership is with it's Border the them and mean ultimately what's and

of benefit. stable, a something having So think be I

more is They border that value never the coming security security found a favor type the security bipartisan. met we one of that anybody the We've who we into technologies. in be have favor with Democrats And we provide, second office. heavily perfectly to The doesn't with offer.

be has and tracking from So involved, tracking stand lengthy of FY might be say what for $XXX there kind administration there's is There the that wall, well. additional we're going about as that million 'XX as key that when be to looking That's on border we're is appropriations. process, legalities that so might but down. a is means this I the might, reallocation far point, to

perspectives when department, the those is border into between that appropriate wants you two So technological. get department provide make of security, sure there to the then are the you and the between stability physical balance and how

Bill Dezellem

I already last said you more tracking. are means know, what pretty year my $XXX million talk I've Mark, order you than up $XX When actually compare that Would time. had you that a $XXX was of taken us million? I allotted big difference. to you million a allocations that to the that But just about

Mark Tinker

glad I'm one. good you a brought overall up. that for that's Yes, border technologies. security It's

decide Department Border they the that. will Patrol and So allocate how

we And so we are technology. only a not are the technology,

go As how for deployed. to in things further being the cameras radars deployed to that's a make direction It's being being step like we security right the you the complimentary something border, can there. currently imagine, that's facilitate might environment or physical that along the

Bill Dezellem

where when to federal Are $XXX generally think million, I the scope. Quantum we we in relevant the actually budget, when about seems there that when small billions, about So other about, pieces are business? pretty that we think talked that

Mark Tinker

agree we significant be It with. going that we and seem will a place to the aspects It's and that to money. that's proportion does of look law and reprogrammed. stood the rather what of your why of down start, when amount small I now start are That's at assessment

understanding have uses a they're valuation. the introducing is But of a and this got to those process make mind part in technology along want in it's complete current step border for patrol technology sure that is any you that we as can of as in close standpoint. more security new full, through keep if confidence. for I sure a there so you we're confidence, of aligned testament that will, some so we're contract make advocating of planned to also funds And go our And where which and coming lot

those come I confidence we'll well rather funds if other So, start the that have can elevating. side, and see out then doing security and when we

Bill Dezellem

installation? next under already or you Are completed in for conversations you've this order once that

Mark Tinker

say time. can't at that I this

Bill Dezellem

were in And that, a you ability Southern then such an doesn't it in Arizona you in that the position votes? the you to to equipment give location still lastly, were anything of Are Meaning to in ocean do identify would give just California pick installed installed able is right that? Pacific you Ocean, a be your elicit that. if up that do in land edge on to you the if but on would

Mark Tinker

not that's have been fabulous but question, I'm we say a Bill, allowed where to installed. currently

Bill Dezellem

thank Great, you.

Operator

follow-up do Bill have a Dezellem [Operator Capital. Instructions] with And we from Tieton

Bill Dezellem

I want though we same the down for that there where guy to and I just think was the citizen. the The had was was in I that Mark, U.S. see a record Mexican even did reason that on. actually that up, question a criminal boat he path continue picked is a was

border if theoretically ocean capable - in but the in guard there patrol your you U.S. you equipment identifying able would so, on the system next land and to be right offshore that And boat the coast ocean, the way? traffic the of is to had

Mark Tinker

me, problem for know you real a you're Bill that.

Bill Dezellem

Thank you, Mark.

Mark Tinker

acquired the of What organizations R&D relationship is, Quantum within we a by Geospace, I'll say deep government. with had number U.S. before

performed traffic. of that exactly having tracking functions doing was One those that, we boat land-based sensors

So, a prudent is capability. this

course, as when now add it. me we're for what conversations ability have their of of the which We even apply. the not that we've now, booked go it's next, clear, make of may we might the to is that family one data lot that these add the it's try and of systems it might in it about and and Geospace really conversations one But street able and for Geospace kind be I acquisition and you're I'm where do I that want are mentioning, ahead value. it's Our to Having to value one being such be a a submarine patrol. knows not gives location cred to next specifically where look referring with part constant we've forward government. about capability, could on, to to application any being government the refined, to one we border a

Bill Dezellem

the installed, theoretical is you by appreciate I'm any now of you, case, and have Thank nabbing level Relative bad I guessing if answer. that is have to guess, success, the say had the I'll guys? equipments there capability, a generically I that you operational

Mark Tinker

You obviously, success will about hear But will board. any about we event. proper report of on successes - occur, coming you it don't won't any them when hear out about do to the hear hard have it's you channels through

Bill Dezellem

taking thanks all questions. my Marks, Okay. for

Mark Tinker

welcome. You're

Operator

Glenn Kukla Kukla our from And question next comes Capital Partners. with

line open. is Your

Glenn Kukla

good How Gentlemen, are you? morning.

Rick Wheeler

you? How Good. are

Glenn Kukla

million trend of Let down but I a management as $XX.X noncurrent to any as is cash has include $XX and and the that up balance revenue, last million $XX elsewhere note? cash up know of or the but equivalents? million that it this balance again classified sheet. is conservative great part me record change I like you've ask deferred wanted by sheet? is on broken partial stewardship from quarter. I Or pay equivalent on of quarter that felt listed the slightly listed that start to cash saying the of the that customers trended cash job I cash see and

Robert Curda

deferred sheet. on included in their balance offset The is in the increase Yes, the for the their cash. to received we cash portions them payments is for

Glenn Kukla

Got you.

trending any with where have cash months, you you Do helpful. XX cash even prediction the Very next in buyback? Okay. the stock equivalents see and

Robert Curda

going provide we information, that we of kind Yes, don't normally that don't forward. or information provide

Glenn Kukla

enough. Fair

million. the from Next agreement that for bank little million reason dropped bit to $XX $XX a noticed that? credit question. I Any

Robert Curda

normal amount borrowing can go within sheet result, that. our adjustments changes cash, changes and along down, a the balance in borrow our with we are to as subject We the Just collect that base. receivables

Glenn Kukla

Got you.

Okay.

once a quarter? review So they that

Robert Curda

assessment make a yes. that We once quarter,

Glenn Kukla

stewardship, into knowing expense I over that to headcount Has plays headcount well. plateau? Okay, great. again good Or your you to was trended how well and feel months wanted manage headcount. do jump to up? back reduced, ago, it's as Six

Robert Curda

continues we level I'd say when did headcount our a at reductions. be - down our cost it it similar is was to as

Glenn Kukla

Great. buying profitable? do miss imaging any Last one T-shirts. that's question miss thoughts think sub-segment. me And if to I Or be you about looking if on or of concerts, I And not, know let sub-segments is profitable? Any that color lot going available? add things the of guys it'll I But is spending some the to that have you not sub-segment and do Geospace. you on of level detail goes a that or profitable concert back is to or T-shirts of forward money don't would you that it say hopefully that

Rick Wheeler

of for Well, than also our do strategy part a and making gas things of that are financials in has extends of goods by events, and that costs look our the can point, it's the all sure of nature social good overall which school and been number part footprint impacted very that. published. restriction the there, show the I our of schools, mean, your you company we in events, But that is enjoy the all sector. of of we've segments them, including at various certainly, we just that It oil certainly To more into of it vast business.

So, our occur those to sorts forward things that to because normal customers the the of provide products go will think and looking demand. other those back a are merchandising we're that recovery more events. COVID-XX, And after the we of that ones for will

Glenn Kukla

that of returns, ever spending sub-segment if off? Even any Great. thoughts demand

Rick Wheeler

to things, that shareholders, would our impact what we're always be the our and to but of all to examine guess how business. return to we're open nature, - going I anything it would have we would

Glenn Kukla

Great.

great Again, guys. today, for got I've So and safe. job stay

Rick Wheeler

you. Thank

the do same. You

Operator

this there Wheeler closing no like I'd back turn over the remarks. time. And are for to questions at program any additional Rick to

Rick Wheeler

thank Well, that's And for All May. XXXX forward to our again on of thank right. joined quarter in conference look our today. speaking fiscal We everyone year with you certainly I you, Aaron. call call the second

now, goodbye. for So

Operator

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

Geospace Technologies (GEOS) 4 Feb 212021 Q1 Earnings call transcript