Earnings call transcript Q3 2023

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Operator

Good day, and welcome to the Geospace Technologies Third Quarter 2023 Earnings Conference Call. Hosting the call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Robert Curda, the company's Chief Financial Officer. Today's call is being recorded and will be available on the Geospace Technologies Investor Relations website following the call. Instructions]. [Operator

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

Rick Wheeler

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

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

risks implied known can or said lead unknown that what is results to today. Both and differ from

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

about learn products. For time little a time recorded sensitive will this Investor be the at visit listens on not hope our accurate recording browse is which page link the Note one of and that to convenience, the call the Relations geospace.com more everyone our of bit website, we Geospace today will and I a replay. information and may to

additional quarter share. XX, results It performance our third per for we April closed, financial Yesterday, third to June released market XXXX, by year the XXXX profitability rewarding extend see was fiscal XXXX. after spanning an fiscal quarter the for $X.XX X further through very our of year

positive highest in designed $XX.X control our achieve. results fact, impact measures cost million years. of intended were long-standing evidence strong represents revenue These In of efforts diversification recent figure the quarterly and recorded the serve as to nine total

both in high-resolution of rental segment segment our the Increased and nodes collecting combined our and bottom nine of around seismic globe. month growth results. ocean continued full near variety In Gas with fueled for at Adjacent a the data fleet our demand for OBX third our Markets Oil products, segment, clients is reliably utilization, Oil quarter Gas and

and In for our of today's Oil Gas to our impetus expect market with year nodal well system. strong fiscal recently million domain industry. occasional contract typical announced and an growing product environment, Mariner demand the were our water demand to the products in segment into that innovations and down new this the up we This for rental of led shallow $XX remain XXXX the

high another In segment figure had fiscal this On was total entire note, of year. totals. with June fiscal the XXXX, three and of almost first highest revenue full Both nine reported. our setting last Adjacent last just all time revenue grew a other periods year's ended record another the and month segment months the quarterly short XX% year XX, Market year XXXX, prior quarter, to beat great this from compared nine yet ever by month

announced cables enhance Aquana to designed shut-off utilities. of meter Also the sensor water employees and our The during of reduce by increase is industrial operations cost the remote water safety valve the Valve driven Actuator quarter, subsidiary a AVS, largely and for of products. Serial, its release the

by domestic the persist. will adjacent in market long-term and municipalities, adoption demand these we smart believe for increase continued water the updates With of systems meter products

additional endeavors transition the be as these mining. future. in carbon month the more clarity previously government some contributed segment perimeter There pursuit portion security related applications to of markets and periods, as underway and energy on efforts are industry for revenue may and announced to of emerging primarily new of such nine strategic defense three storage, but the Our contracts. contracts well small near secure a as geothermal during Further

financial little I'll a turn our call to detail Robert performance. now that, to give over the With third on quarter more

Robert Curda

Thanks, Rick. Good morning.

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

we share. third per In to our of yesterday's loss million, quarter revenue of press ended or $XX.X The year's per for compared $X.X June release of million XX, share, to was million revenue reported $X.X the net for income million. or net XXXX, year's $X.XX last last diluted $XX.X compared $X.XX quarter diluted

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

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

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

an the OBX contributed revenue $XX.X period for fleet month in to our revenue higher demand The year, million due nine rental segment month of seismic utilization nine period, million increase sensors. and the our the XX%. of for and month same For are equipment last and of three for higher the periods increase $XX.X versus marine

period for was nine in month in decrease increase partially revenue offset demand our wireless The products. exploration a by

third third follows: over year as an increase product the XXXX. Our of fiscal industrial was quarter segment our revenue million, of XXXX the adjacent quarter markets revenue $XX.X XX% of is for

revenue revenue in is products due to of period industrial sales of and water $XX.X connector our cable periods meter Both month higher XXXX million, nine products our an sensor for increase over increases same higher are demand and products. XX%. The the industrial

million in products $X.X was million the The last $X.X versus XXXX. the to of month same million. imaging for revenue year's compared is product to Imaging period revenue nine quarter $X.X revenue $X.X for million compared third

in quarter period XXXX. prior same $XXX,XXX year compared the Finally, for $XXX,XXX revenue Markets segment for our for for this same to compared month for fiscal the The year third $XXX,XXX Emerging segment for the period. nine was revenue to was the $XXX,XXX

fiscal earlier Markets Our DARPA, other contracts contractors. segment year on or with governmental agencies perform to Emerging was continues and which this announced

decreases three due the XXXX increased operating in to research slight period for $XXX,XXX to sales expenses development third the fiscal liabilities selling operating expenditures month for of increased nine the the non-cash offset of by value higher to operating due lower and costs. is Excluding contingent $XXX,XXX for our The The month expenses is in expenses expense. in for period. month and increased increase by by quarter development XXXX, recorded fair increase expense nine earn-out year slightly the research and modestly period and

investments investments Our are plant million. and nine cash property, $X.X equipment into our month fleet net and million is into $X.X rental

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

happy into on new an entered additional also we in report credit provide which are We will to liquidity. million facility a July XX, $XX

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

That concludes I'll my to call discussion, and Rick. return the

Rick Wheeler

delivered financially positive years In successful sheet. many but quarters one also balance outpacing Robert. our quarterly Geospace consecutive second net we X for million of in you, the income $XX past garnered conclusion, its that further strengthening revenue only and cash with cash equivalents, the Not achieved was quarter, of most Thank years. in over

Bank. approximately also agreement Woodforest $XX Robert through with that liquidity We credit to boosted a National completed million mentioned

we don't foreseeable future. anticipate for in However, borrowing a the need

prepared of expect fiscal Todd call I'll performance This we any questions though our concludes XXXX even may and over our see the into now occur. from commentary, to and some throughout commerce our for year turn lulls XXXX, favorable back so Looking elements forward, and listeners. to

Operator

floor first Bill question The Dezellem Capital. for you. Instructions] from Thank We'll is now with questions. Tieton your [Operator open take our

Bill Dezellem

yet, comments the the with utilization. in And the start to being contract like coming fleet up. I'd Mariner relative release have that's OBX we the rental near full to

the OBX utilized contracts will are Mariner incremental to instead and question of replacing revenue are those ending? those have is is, So contract contracts being, I and that being some be the OBX fully that from or that this

Rick Wheeler

additional fulfilling Mariner rentals. Bill. contract bottom our ocean node Hi, The demand for is actually

XXXs, the tie other. So currently current that here there jobs rental new always are are necessarily demand. be inventory occur that the as the in gaps But utilization. don't is there and one system ones are completely which the right into full the will Mariner these And satisfying near OBX

Bill Dezellem

And we a full And that's upside of as would be part revenue is an you utilization. OBX said, as there rental And as the business? full forward, utilization the maintaining. that look result, from the quasi

Rick Wheeler

so. think I Yes,

Bill Dezellem

potentially recall much mining, in And much don't may. Congratulations. then as the in into Okay. carbon discussion press really out with you for you along dive if quantum, geothermal significant. as let past areas and geothermal I both can, That's I me and called capture. release about near shift I the to believe detail those future opportunities please? Would specifically And mining.

Rick Wheeler

work, at have there. knowledge issues been into amongst too much and and of part are recently. carbon a of go And up Those in the the Quantum areas SADAR and transition The that work of where that beyond above know can't lot and significant energy is Canada, carbon up developments I that are team play hard can Yes. yielded actually new only appeared you have role capture. consortium a here popping capture has underway detail.

said, is to. out see because are on some to know more being including new these discussions the these that leads won't busy of again, geothermal developments. new So have trying to that other until started what and And discussions through work those team work mining. we and And topical areas, it future rather

Bill Dezellem

through on is and is for? problem Mark geothermal he be the would the us the if in particular, would to that the walk able system And be solving what call,

Rick Wheeler

micro general, activity. Well, it's all in seismic

too, water it these and So things, all of in inject up. to and trying heat you're geothermal

place need you to And their without integrity. so sure with you're in all leaving interfering structures make

stand. So this where activity underway, the there's of similarly where monitor precise considerable things mining want things that know you to and microseismic techniques some are new to

SADAR that So that's can problem the essentially solve. statement

Bill Dezellem

And taking kind further. of Rick, one step that

particular, oil happening drilling, you're earth. what's putting the similar the monitor in would back when well to reinjection geothermal a wanting water and So into with to fluid be gas

Rick Wheeler

by I Certainly think. analogy,

Bill Dezellem

Yes.

on and you nice quarter. Thank Great. a really congratulations Okay.

Rick Wheeler

you. Thank

Robert Curda

Bill Thanks, happy and birthday.

Bill Dezellem

you. Thank

Operator

our take Michael first [Operator with next Melby our Capital. -- City Instructions] We'll question Gate sorry, from

Michael Melby

the good morning, results. Good Congrats gentlemen. on

Robert Curda

Mike. Hi,

Michael Melby

had yet hoping on helpful think quarter, good not more more good your little had and audience understand involved industrial to a about And I and much segment Industrial market, centers Hey, meter of what's really or potential led a the Aquana subsegment it's growth your the as think Products far really I I and would color size really you has it contributed And give good the to expand as was Markets. it for here you've investors the year. Adjacent results Can could potential, within so the described you be year. what's it cables. on this a there, and the water

Robert Curda

Yes.

a as that That we're growth of our of a connectors. city meter and to municipalities. expansion So portion of is smart growth water related meters result is the cables of as largest result water sensors, what meter seeing smart within initiatives the

of expect As market, industry as continue that forward going the far that to to size and or expand we grow. it continue to

that just growth. as continual this that, the necessarily far smart we of that seismic a in bit receive is part, larger measure think a seen for the and orders get and been the has larger just harder some expected. to as we a haven't going to or and sensor times, initiative We has good But business are being future. to us very portion city The it's planned business, for many little determine that year something

Rick Wheeler

our the industrial sensors some A lumps. is see lot in lumpy. think of cases, Mike, some I business

including are of vibration already monitoring these there. to some ICs and that and are equipment used these and of semiconductors. vibration But are aspects very tables for also subject in I they're of think shake tables monitoring silicon-based that. making And for in that and some products, sorts, are know sensors certainly, too. isolation fabrication all the you pieces used they of special There important and equipment

we to that little or and that monitoring, forecast until Robert case, alluding a the and in any that's necessarily they're in drove think actually just given happen. to not government of than expect this uses planned in is sometimes what would So addition with I they respect exactly maybe understood vibration some higher to

but sales, Aquana. pilot it has some relates sales. to as are certainly of these And most Aquana had

orders from anticipated municipalities. are So of they're to really the a that larger precursor some these

better you've can with trucks, to send got thousands as of for You well those just -- give operational seriously costs out you've roll a you meant to innovative demonstrate imagine of meters as and well a product can that savings with as footprint that's people having municipality their managing, and respect when employees. an to got them are safety

be There's pilot that make some going these they're they out where programs to what doing is sure try proposed. and

orders. are believe, and majority be in the sales what So larger been will I of these precursors have to programs

Michael Melby

within share it. in Got or water sole something business, market any OEM And you the very in connectors is meters, jobs? source this have cables and high

Rick Wheeler

go you have second-half of want market. think to ahead, Well, good a that the we I finish if question.

Michael Melby

I to you've was just from And guess, or if understand the Yes. trying benefiting in share our growth I overall gains the increases revenue the seen market.

Rick Wheeler

That's the smart I up really there. latter don't the mode, escalation otherwise. city absolutely say an that movement that is mean would industry is keeps the half to pinpoint hard that anyone fact think I with

for are of have So only there and extent, get now engaged. meters and into time been a are the deeply some that to lot large into beginning smart municipalities it to others any

So the entire and of industry, itself, in is growing.

to adds an increased demand. that So

very point piece of a of from share big I think I have market market we share. view, a the that think

of they products, fact, represent very cost ways that. still But the of we've of doing help because And in there. some way Now as them. smart and with reality, in effective keep quality more think out that the come market for that they're but I share. some to customers in have up mind And initial reliable of just they in out innovative our much ours, products to us have It's connected days, came does the buy hooked that get trying that they up. had meters and competitive there's and some them in

Michael Melby

connector do how alongside of Is cable how your you as to the it roll Or share that? product strong entirely plan out an separate you bundle set? is rolled to And out? Aquana in and given the plan Aquana business,

Rick Wheeler

smart with is and some they need that metering going with have downstream, movement. Aquana to but own radios The on There components smart fact connectivity to its electric independent is the other some and the believe I associated it's we're that now and have valves. other working do to that are overlap, these valves, of the the things

It's So of to in the water our regard, nice going connectors. base also think Aquana's use of its because meter I products they these own certainly independent going overlap. will too overlap. significant connectors and value cables have much there demonstrate customer is that for to is that the and But really

Robert Curda

for And that positioned installation. the a also has keeping type valve management, Aquana is that property property multifamily

So that's different the than something market. utility

Rick Wheeler

true, That's too.

Michael Melby

Can how significant within you the could speak Aquana's segment? be revenues to

Rick Wheeler

opportunity we there. didn't I think them was Well, bought mean, we there wouldn't have if significant

market either. way increase So fast and intended in just what matter are regard of get do. these going. guidance pilot this really, efforts and are don't getting But won't what no, it's That's to how That's in to that in give programs a all case can we sales the word the intended and that out. of developed we our marketing efforts do

Michael Melby

there margins impacted here? Were And margins in can positively are the you that to better onetime operating alluded and from things remain attractive. the Or that? get strong maybe segment

Robert Curda

continue, think going growth obviously a we're going operating price I think meter improvement part see going I significant forward. we that's to recently -- and to think of that, any in had not to water I margins but I'm cables. increase what contributed for don't

Rick Wheeler

manufacturer. Well, Mike, know we're a you

that we So absorb a make margin overheads into I the think those as being lot put those more the the increases put had at because to a parts simply we think our to working relates effectively. a lot do more that irrespective organization is of a factory that level state, it other higher to of things, I with And work cables. factory the then

Robert Curda

That's correct. absolutely

Michael Melby

I I And think missed it.

contract for? it fiscal of year. run in long next Mariner the think I QX How starts does

Robert Curda

a It's one-year contract.

Michael Melby

you that too. and the million, release, $XX in the the for options suggest includes that's press And

Rick Wheeler

that of extending the purchasing Yes. includes equipment. and options million contract have that even The they $XX the

Michael Melby

included as if year are well. those since total one options in And I guess the

Rick Wheeler

I what sure you're saying. not understand I'm

Michael Melby

$XX we Should is million one year? year? being about over think Or over than one the it more

Robert Curda

year, is The $XX one over minimum the million of rental period yes.

Michael Melby

And year the and full QX investment what your gone for of we up equipment, fiscal or in was in it's terms in CapEx I rental expect should now? wondering

Rick Wheeler

Mariner year. next into to Well, fiscal certainly, I the is mean, fall probably going

Robert Curda

purchased No. this to related there is be components of our increase Mariner we a in contract. Part could year expectation had

to know fleet. we be components. of contract, will going that signed we're they assembling we've be units, part assembling ultimately now We're rental those actually that and into them Now our

of included we in cash so quarter, quarter spent that we'll ended -- of turn fiscal fleet do the preemptively into kind where that we some quarter first and some more So in this the rental far of next next in year.

Michael Melby

before might spend have an CapEx you've you guided how equipment. much have I Yes. to update I Do plan think investors? guidance, in the in but and the in fiscal there on you for mentioned then year rental towards

Robert Curda

update an now, have right don't sorry. I No,

Rick Wheeler

what with line regard. though, in in already changes really, so it's that major was think I no mentioned

Robert Curda

Yes.

Michael Melby

it me. from Thank That’s you.

Rick Wheeler

Alright. Thanks, Mike.

Operator

We'll with Moors & next question take Cabot. you. from our Thank Scott Bundy

Scott Bundy

A sales? is program? that questions. Good morning, we the Or introduced was or product released, AVS couple guys. that of a are quick pilot Rick, making actually

Rick Wheeler

these large not were. they're but Well, pilot programs are it quantities sales, as

to So say markets sale. it's that new can product a they And I the have extends serve. it's a

Scott Bundy

your question. press part Will constrain business. decision increase revenue statement, can release recent manufacturing to confused elaborate the going water in answered You the what in with demand increase the -- capacity on meet cable I'm to attributable in we there? a for to meter the you is the

Rick Wheeler

No, we were definitely constrained.

to affecting of was orders. of harder it our in us quantities our making were And was growing that needs grow. lead times, the to for backlog customers, Our serve in continuing terms which the

we that So more going our that likely do new so. capabilities And be definitely to in regard increase even manufacturing there's enhanced adding could there, so that we equipment, capacity. we that

Scott Bundy

roughly of are Robert, the company? loss carryforwards speaking, lastly, the And where

Robert Curda

reserved we of those string fully until reverse together, sheet, they're us. see got we it allowances We've starts to many we accrued, the months that income starts and of reserves that those to and loss or significant. losses many won't are valuable valuation many, on years but have They're carryforwards balance

Scott Bundy

But $XXX in has that correct? in your XX-K number million, the exceeded past,

Robert Curda

Yes, I believe it has.

Scott Bundy

guys. going. Thanks Nice

Rick Wheeler

Thanks, Scott.

Operator

have at queue. And turn further or Instructions] [Operator Wheeler we closing to remarks. questions time, Rick in I'll back you. call Thank for any no this the additional

Rick Wheeler

many our you for year today, Todd. of call to occur thank to and All call will in of fiscal joined right. all on Well, fourth which the quarter conference look November. thanks you, with you who our again And XXXX, we forward speaking

and until goodbye. thanks, then, So

Operator

have Thank time, you. Earnings Quarter XXXX line This at Call. wonderful a conclude day. Technologies Geospace Please and disconnect Third does your today's Conference this

Geospace Technologies (GEOS) 11 Aug 232023 Q3 Earnings call transcript