Attached files
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| 8-K - 8-K - GEOSPACE TECHNOLOGIES CORP | d30505d8k.htm |
Exhibit 99.1
NEWS RELEASE
7007 Pinemont Drive
Houston, TX 77040 USA
Contact: W. Richard Wheeler
President and CEO
TEL: 713.986.4444
FAX: 713.986.4445
FOR IMMEDIATE RELEASE
GEOSPACE TECHNOLOGIES REPORTS FISCAL YEAR 2015
THIRD QUARTER RESULTS
Houston, Texas – August 6, 2015 – Geospace Technologies (NASDAQ: GEOS) today announced a net loss of $8.6 million, or $0.66 per diluted share, on revenues of $19.8 million for its fiscal quarter ended June 30, 2015. This compares with a net income of $3.8 million, or $0.29 per diluted share, on revenues of $40.7 million for the corresponding quarter in the prior fiscal year.
For the nine months ended June 30, 2015, the company recorded revenues of $68.9 million and a net loss of $19.2 million, or $1.48 per diluted share. For the comparable period last year, the company recorded revenues of $210.6 million and a net income of $38.7 million, or $2.95 per diluted share.
Walter R. (“Rick”) Wheeler, Geospace Technologies’ President and CEO said, “In our third fiscal quarter, we saw no relief from the continuation of depressed market conditions and declining demand for our seismic equipment products. When compared to last year, fiscal year 2015 third quarter revenues were down by $21.0 million or 52%, and in the nine months ended June 30, 2015 revenues declined by $141.8 million or 67% from the same period a year ago. These revenue declines are attributed to the pronounced decrease in demand for our seismic products seen in today’s market, coupled with having no large contracts currently underway for the manufacture of permanent reservoir monitoring (PRM) systems.”
“Traditional seismic product revenues in the third fiscal quarter were $6.3 million, a decrease of $3.6 million or 36% from last year. For the nine months ended June 30, 2015, revenues for this segment were $23.6 million, a reduction of $19.7 million or 45% over the same prior year period. The reductions in both periods are a direct reflection of the very low industry activity in the current seismic exploration market. In addition, the difference in revenue year-over-year for the nine month period is accentuated by uncommonly large geophone orders in last year’s first quarter.”
“Revenues for wireless products in the third quarter were $6.0 million, a decrease of $6.2 million or 51% from the third quarter of last year. For the nine months ended June 30, 2015, our wireless product revenues totaled $23.8 million, a decrease of $46.5 million or 66% compared to the same period last year. These declines are again a direct result of reduced demand for seismic equipment in today’s market. We
note, however, that in contrast to the declining overall seismic market, utilization of our OBX marine nodal systems continued to increase in the third quarter. We deployed over 3,700 OBX stations from our rental fleet to various customers on different projects throughout the quarter. Rental revenues have sequentially increased in our second and third quarters of this fiscal year, mostly from increasing rentals of the OBX marine nodal system. While we remain encouraged about the future of our OBX product line, project delays and job cancellations reported by our customers demonstrate that risk and volatility still remain even in this specialized ocean bottom seismic market.”
“Reservoir product revenues for the third quarter totaled $1.2 million, a decrease of $12.1 million or 91% compared to last year’s third quarter. For the nine months ended June 30, 2015, reservoir product revenues were $4.5 million, a reduction of $76.2 million or 94% compared to the same period of last year. Although lower demand for our borehole and other reservoir products was a contributor to these decreases, the largest component of these decreases was the absence of any PRM system contracts during the current fiscal year. Last year, the Statoil PRM order contributed revenues of $6.7 million and $61.7 million for the three months and nine months ended June 30, 2014, respectively. Discussions are continuing with potential customers for future PRM systems and we believe that our vast leadership, experience, and past success in PRM technology for over a decade keep us well positioned to secure future PRM contracts.”
“Our non-seismic businesses continued down the path of improved performance. Third quarter revenues were $6.1 million, a sequential increase of 21% from the second quarter, and an increase of $0.9 million or 17% from last year. For the nine months ended June 30, 2015, revenues and operating income for our non-seismic businesses were $16.5 million and $2.3 million, respectively, up 4% and 29% from the same period last year.”
“Industry demand for seismic exploration services is at historic low levels, and there is no simple way to forecast when higher levels of product demand may return. To the extent that the current market conditions in the industry remain unchanged, demand for our seismic equipment products will likely continue at these low levels. Until seismic industry activity returns to more conventional norms, our profits will continue to be hard hit by depreciation of unutilized rental equipment and fixed factory overhead costs left unabsorbed by minimal manufacturing operations. Given that seismic exploration and reservoir management are necessary components for a stable and sustainable energy market, endurance through this down cycle and a strong emergence thereafter are our focused objectives. We believe that our strong balance sheet and continued development of industry technology are the key elements that will allow us to achieve these objectives.”
Conference Call Information
Geospace Technologies will host a conference call to review its fiscal year 2015 third quarter financial results on August 7, 2015, at 10:00 a.m. Eastern Time (9 a.m. Central). Participants can access the call at (866) 952-1906 (US) or (785) 424-1825 (International). Please reference the conference ID: GEOSQ315 prior to the start of the conference call. A replay will be available for approximately 60 days and may be accessed through the Investor tab of our website at www.geospace.com.
About Geospace Technologies
Geospace Technologies Corporation designs and manufactures instruments and equipment used by the oil and gas industry to acquire seismic data in order to locate, characterize and monitor hydrocarbon producing reservoirs. The company also designs and manufactures non-seismic products, including industrial products, offshore cables, thermal printing equipment and film.
Forward Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included herein including statements regarding potential future products and markets, our potential future revenues, future financial position, business strategy, future expectations and estimates and other plans and objectives for future operations, are forward-looking statements. We believe our forward-looking statements are reasonable. However, they are based on certain assumptions about our industry and our business that may in the future prove to be inaccurate. Important factors that could cause actual results to differ materially from our expectations include the level of seismic exploration worldwide, which is influenced primarily by prevailing prices for oil and gas, the extent to which our new products are accepted in the market, the availability of competitive products that may be more technologically advanced or otherwise preferable to our products, tensions in the Middle East and other factors disclosed under the heading “Risk Factors” and elsewhere in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which are on file with the Securities and Exchange Commission. Further, all written and verbal forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such factors. We assume no obligation to revise or update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise.
GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||||||||
| Revenues: |
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| Products |
$ | 15,467 | $ | 33,437 | $ | 58,763 | $ | 190,167 | ||||||||
| Rental equipment |
4,284 | 7,291 | 10,096 | 20,460 | ||||||||||||
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| Total revenues |
19,751 | 40,728 | 68,859 | 210,627 | ||||||||||||
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| Cost of revenues: |
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| Products |
19,233 | 21,902 | 59,248 | 110,540 | ||||||||||||
| Rental equipment |
3,824 | 3,450 | 11,522 | 9,716 | ||||||||||||
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| Total cost of revenues |
23,057 | 25,352 | 70,770 | 120,256 | ||||||||||||
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| Gross profit (loss) |
(3,306 | ) | 15,376 | (1,911 | ) | 90,371 | ||||||||||
| Operating expenses: |
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| Selling, general and administrative |
5,469 | 6,237 | 17,291 | 19,493 | ||||||||||||
| Research and development |
3,564 | 3,667 | 10,556 | 13,139 | ||||||||||||
| Bad debt expense |
112 | 14 | 1,130 | 658 | ||||||||||||
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| Total operating expenses |
9,145 | 9,918 | 28,977 | 33,290 | ||||||||||||
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| Income (loss) from operations |
(12,451 | ) | 5,458 | (30,888 | ) | 57,081 | ||||||||||
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| Other income (expense): |
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| Interest expense |
(36 | ) | (143 | ) | (255 | ) | (378 | ) | ||||||||
| Interest income |
138 | 12 | 312 | 68 | ||||||||||||
| Foreign exchange gains (losses), net |
(567 | ) | 52 | 1,621 | 132 | |||||||||||
| Other, net |
(24 | ) | (50 | ) | (137 | ) | (88 | ) | ||||||||
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| Total other income (expense), net |
(489 | ) | (129 | ) | 1,541 | (266 | ) | |||||||||
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| Income (loss) before income taxes |
(12,940 | ) | 5,329 | (29,347 | ) | 56,815 | ||||||||||
| Income tax expense (benefit) |
(4,376 | ) | 1,577 | (10,156 | ) | 18,071 | ||||||||||
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| Net income (loss) |
$ | (8,564 | ) | $ | 3,752 | $ | (19,191 | ) | $ | 38,744 | ||||||
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| Basic earnings (loss) per share |
$ | (0.66 | ) | $ | 0.29 | $ | (1.48 | ) | $ | 2.96 | ||||||
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| Diluted earnings (loss) per share |
$ | (0.66 | ) | $ | 0.29 | $ | (1.48 | ) | $ | 2.95 | ||||||
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| Weighted average shares outstanding – Basic |
13,002,916 | 12,951,845 | 12,994,391 | 12,949,807 | ||||||||||||
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| Weighted average shares outstanding – Diluted |
13,002,916 | 12,999,807 | 12,994,391 | 13,001,103 | ||||||||||||
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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
| June 30, 2015 |
September 30, 2014 |
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| (unaudited) | ||||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 25,606 | $ | 33,357 | ||||
| Short-term investments |
19,610 | 19,861 | ||||||
| Trade accounts receivable, net |
13,339 | 24,602 | ||||||
| Current portion of notes receivable |
4,504 | 3,786 | ||||||
| Income tax receivable |
9,399 | 2,570 | ||||||
| Inventories, net |
131,387 | 145,890 | ||||||
| Deferred income tax assets |
8,320 | 7,244 | ||||||
| Prepaid expenses and other current assets |
3,018 | 6,698 | ||||||
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| Total current assets |
215,183 | 244,008 | ||||||
| Rental equipment, net |
48,789 | 53,873 | ||||||
| Property, plant and equipment, net |
50,445 | 49,205 | ||||||
| Goodwill |
1,843 | 1,843 | ||||||
| Non-current deferred income tax assets |
1,202 | 75 | ||||||
| Non-current notes receivable |
1,077 | 28 | ||||||
| Prepaid income taxes |
4,515 | 5,848 | ||||||
| Other assets |
97 | 106 | ||||||
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| Total assets |
$ | 323,151 | $ | 354,986 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Accounts payable trade |
$ | 3,114 | $ | 4,964 | ||||
| Accrued expenses and other current liabilities |
9,559 | 14,590 | ||||||
| Deferred revenue |
312 | 3,752 | ||||||
| Deferred income tax liabilities |
41 | 23 | ||||||
| Income taxes payable |
— | 22 | ||||||
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| Total current liabilities |
13,026 | 23,351 | ||||||
| Non-current deferred income tax liabilities |
1,102 | 2,377 | ||||||
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| Total liabilities |
14,128 | 25,728 | ||||||
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| Preferred stock |
— | — | ||||||
| Common stock |
131 | 131 | ||||||
| Additional paid-in capital |
73,073 | 70,704 | ||||||
| Retained earnings |
241,728 | 260,919 | ||||||
| Accumulated other comprehensive loss |
(5,909 | ) | (2,496 | ) | ||||
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| Total stockholders’ equity |
309,023 | 329,258 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 323,151 | $ | 354,986 | ||||
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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months | Nine Months | |||||||
| Ended | Ended | |||||||
| June 30, 2015 | June 30, 2014 | |||||||
| Cash flows from operating activities: |
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| Net income (loss) |
$ | (19,191 | ) | $ | 38,744 | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
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| Deferred income tax benefit |
(3,458 | ) | (730 | ) | ||||
| Depreciation |
14,777 | 13,125 | ||||||
| Accretion of discounts on short-term-investments |
174 | 3 | ||||||
| Stock-based compensation |
3,434 | 3,026 | ||||||
| Bad debt expense |
1,130 | 658 | ||||||
| Inventory obsolescence expense |
2,566 | 2,176 | ||||||
| Gross profit from the sale of used rental equipment |
(1,658 | ) | (10,309 | ) | ||||
| Gain on disposal of property, plant and equipment |
(2 | ) | (60 | ) | ||||
| Excess tax expense from stock-based compensation |
(1,065 | ) | — | |||||
| Effects of changes in operating assets and liabilities: |
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| Trade accounts and notes receivable |
7,314 | 25,081 | ||||||
| Income tax receivable |
(6,829 | ) | — | |||||
| Inventories |
5,274 | (6,738 | ) | |||||
| Costs and estimated earnings in excess of billings |
— | 12,400 | ||||||
| Prepaid expenses and other current assets |
2,832 | 78 | ||||||
| Prepaid income taxes |
1,333 | (109 | ) | |||||
| Accounts payable |
(1,827 | ) | (12,036 | ) | ||||
| Accrued expenses and other |
(8,127 | ) | (255 | ) | ||||
| Deferred revenue |
(3,412 | ) | 2,987 | |||||
| Income taxes payable |
(19 | ) | 3,033 | |||||
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| Net cash provided by (used in) operating activities |
(6,754 | ) | 71,074 | |||||
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| Cash flows from investing activities: |
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| Purchase of property, plant and equipment |
(2,046 | ) | (5,650 | ) | ||||
| Investment in rental equipment |
(3,784 | ) | (25,726 | ) | ||||
| Proceeds from sale of used rental equipment |
4,547 | 16,019 | ||||||
| Proceeds from the sale of property, plant and equipment |
— | 27 | ||||||
| Purchases of short-term investments |
(4,281 | ) | (5,867 | ) | ||||
| Proceeds from the sale of short-term investments |
4,415 | — | ||||||
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| Net cash used in investing activities |
(1,149 | ) | (21,197 | ) | ||||
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| Cash flows from financing activities: |
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| Principal payments on debt arrangements |
— | (931 | ) | |||||
| Excess tax benefit from stock-based compensation |
— | 674 | ||||||
| Proceeds from exercise of stock options |
— | 265 | ||||||
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| Net cash provided by financing activities |
— | 8 | ||||||
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| Effect of exchange rate changes on cash |
152 | (3 | ) | |||||
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| Increase (decrease) in cash and cash equivalents |
(7,751 | ) | 49,882 | |||||
| Cash and cash equivalents, beginning of period |
33,357 | 2,726 | ||||||
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| Cash and cash equivalents, end of period |
$ | 25,606 | $ | 52,608 | ||||
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GEOSPACE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
SUMMARY OF SEGMENT REVENUES AND OPERATING INCOME (LOSS)
(in thousands)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||||||||
| Seismic segment revenues: |
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| Traditional exploration products |
$ | 6,323 | $ | 9,928 | $ | 23,613 | $ | 43,272 | ||||||||
| Wireless exploration products |
6,017 | 12,184 | 23,796 | 70,333 | ||||||||||||
| Reservoir products |
1,198 | 13,265 | 4,503 | 80,702 | ||||||||||||
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| 13,538 | 35,377 | 51,912 | 194,307 | |||||||||||||
| Non-Seismic segment revenues |
6,098 | 5,209 | 16,548 | 15,916 | ||||||||||||
| Corporate revenues |
115 | 142 | 399 | 404 | ||||||||||||
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| Total revenues |
$ | 19,751 | $ | 40,728 | $ | 68,859 | $ | 210,627 | ||||||||
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| Three Months Ended | Nine Months Ended | |||||||||||||||
| June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||||||||
| Operating income (loss): |
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| Seismic segment |
$ | (10,253 | ) | $ | 8,149 | $ | (23,382 | ) | $ | 66,165 | ||||||
| Non-Seismic segment |
971 | 777 | 2,331 | 1,814 | ||||||||||||
| Corporate |
(3,169 | ) | (3,468 | ) | (9,837 | ) | (10,898 | ) | ||||||||
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| Total operating income (loss) |
$ | (12,451 | ) | $ | 5,458 | $ | (30,888 | ) | $ | 57,081 | ||||||
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