On August 8, 2024, Geospace Technologies Corp (GEOS, Financial) released its 8-K filing reporting financial results for the third quarter and nine months ended June 30, 2024. Geospace Technologies Corp is engaged in designing and manufacturing seismic instruments and non-seismic equipment used in the oil and gas industry. The company operates through three segments: oil and gas markets, adjacent markets, and emerging markets, with more than half of its revenue generated within the United States.
Performance Overview
For the third quarter ended June 30, 2024, Geospace Technologies Corp reported revenue of $25.9 million, a decrease from $32.7 million in the same quarter of the previous year. The company posted a net loss of $2.1 million, or ($0.16) per diluted share, compared to a net income of $3.2 million, or $0.24 per diluted share, in the year-ago quarter.
For the nine-month period, revenue increased to $100.2 million from $95.2 million in the comparable period of the previous year. Net income for the nine months was $6.3 million, or $0.47 per diluted share, down from $7.8 million, or $0.59 per diluted share, in the prior year period.
Segment Performance
Oil and Gas Markets Segment: Third quarter revenue from this segment totaled $9.2 million, a significant decrease from $17.7 million in the same period last year. The decline was attributed to lower utilization of the company's wireless seismic rental fleet due to weather-related delays, competition, and product availability. However, for the nine-month period, revenue increased by 6.6% to $59.9 million, primarily due to a $30 million sale of the Mariner™ shallow water ocean bottom nodes in the first quarter.
Adjacent Markets Segment: This segment achieved record revenue of $16.0 million in the third quarter, up from $14.9 million in the same period last year. The increase was driven by growing industry acceptance of water meter cables and connectors. For the nine-month period, revenue was slightly down by 1% to $38.0 million.
Emerging Markets Segment: Revenue for this segment surged to $640,000 in the third quarter from $109,000 in the same period last year, largely due to the fulfillment of a DARPA contract. For the nine-month period, revenue increased to $2.0 million from $393,000 in the prior year period.
Financial Achievements
Geospace Technologies Corp maintained a strong balance sheet with no debt and $42.5 million in cash and short-term investments as of June 30, 2024. The company also announced a stock repurchase program, having repurchased approximately 512,000 shares on the open market as of August 7, 2024, with an additional $2.0 million authorized for future repurchases.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $25.9M | $32.7M | $100.2M | $95.2M |
| Net Income (Loss) | ($2.1M) | $3.2M | $6.3M | $7.8M |
| EPS (Diluted) | ($0.16) | $0.24 | $0.47 | $0.59 |
| Cash & Short-term Investments | $42.5M | - | - | - |
Management Commentary
Walter R. (“Rick”) Wheeler, President and CEO of the Company said, “As we close the third quarter with three months of fiscal year 2024 remaining, we continue to maintain a profitable year, reporting positive net income of $6.3 million, or $0.47 per share. In addition, our longstanding and unwavering commitment toward sustaining a strong balance sheet with no debt remains firmly intact, with holdings of $42.5 million in cash and short-term investments as of June 30, 2024. Nonetheless, third quarter revenue from our Oil & Gas Markets segment was negatively impacted by further gaps in our OBX rental contracts, leading to a net loss of $2.1 million for the three months ended June 30, 2024. The extended gaps are the result of unexpected weather delays, customer operational difficulties, and unawarded client surveys during the period, although some of the work is expected to resume in the fourth quarter.”
Analysis
Geospace Technologies Corp's performance in the third quarter reflects the challenges faced by the oil and gas industry, including weather-related delays and operational difficulties. However, the company's strong performance in the Adjacent Markets segment and its robust balance sheet with no debt are positive indicators. The strategic diversification into adjacent and emerging markets appears to be paying off, providing a buffer against the volatility in the oil and gas sector.
Investors should monitor the company's ability to resume delayed contracts in the fourth quarter and the continued growth in the Adjacent Markets segment. The upcoming leadership transition will also be a key factor to watch as the company navigates these challenges and opportunities.
Explore the complete 8-K earnings release (here) from Geospace Technologies Corp for further details.
