Q1 2022 Geospace Technologies Corp Earnings Call
Speaker 1: The program is about to begin.
To begin.
Yes.
Speaker 2: Welcome to the Geospace Technologies first quarter 2022 earnings conference call. Hosting the call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Robert Curta, the company's Chief Financial Officer, and Mark Tinker, CEO of Geospace Subsidiary Quantum Technology Sciences.
Welcome to the Geo space Technologies' first quarter 2022 earnings conference call hosting the call today from T. O space is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Robert Kurt up the company's Chief Financial Officer, and Mark Tinker CEO of T O space subsidy.
Aerie quantum technology Sciences, today's call is being recorded and will be available on the Geo space technologies Investor Relations website following the call.
Speaker 2: Today's call is being recorded and will be available on the Geospace Technologies Investor Relations website following the call.
Speaker 2: At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation.
At this time, all participants have been placed in a listen only mode and the floor will be open for your questions. Following the presentation. If he would like to ask a question at that time. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing the pound key we ask that you. Please pick up your handset to allow optimal sound.
Speaker 2: If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Rick Wheeler. Sir, you may begin.
Quality lastly, if you should require operator assistance. Please press star zero and it is now my pleasure to turn the floor over to Rick Wheeler, Sir you may begin.
Thank you Britney.
Speaker 3: Thank you, Brittany. Good morning and welcome to Geospacet Technologies conference call for the first quarter of our 2022 fiscal year. I'm Requeter of the Company's President and Chief Executive Officer and I'm joined by Robert Curtis, the Company's Chief Financial Officer.
Good morning, and welcome to Geospatial Technologies Conference call for the first quarter of our 2022 fiscal years.
I'm, Rick Wheeler, the company's President and Chief Executive Officer, and I'm joined by Robert Kurt is the company's Chief Financial Officer also with US. This morning is Dr. Mark Tinker CEO of our quantum technology Sciences subsidiary Alpha.
Speaker 3: Also with us this morning is Dr. Mark Tinker, CEO of our Quantum Technology Sciences, let's see the area. I'll first give an overview of the first quarter, and Robert will follow that within depth commentary on our financial performance. After a few last remarks, we'll open the line for questions that Robert Mark and I will try to answer.
I'll first give an overview of the first quarter and Robert will follow that with in depth commentary on our financial performance.
After a few last remarks, we'll open the line for questions that Robert Mark and I will try to answer.
Speaker 3: Some of today's comments may be forward looking as defined in the private securities litigation reform act of 1995. This includes comments about markets, revenue recognition, planned operations, and capital expenditures.
Some of today's comments may be forward looking as defined in the private Securities Litigation Reform Act of 1995. This includes comments about markets revenue recognition planned operations and capital expenditures.
Speaker 3: Such statements are based on our present awareness with actual outcomes affected by factors and uncertainties we cannot predict or control.
Such statements are based on our present awareness with actual outcomes affected about factors and uncertainties, we cannot predict or control.
Both known and unknown risks can lead to performance and results to differ from what we say or imply today such risks and uncertainties include those discussed in our SEC Form 10-K , and 10-Q filings.
Speaker 3: Both known and unknown risks can lead to performance and results that differ from what we say or imply today. Such risks and uncertainties include those discussed in our SEC form 10K and 10Q filing.
Speaker 3: For convenience, we will link a recording of this call on the Investor Relations page of our geospacest.com website.
For convenience, we will link a recording of this call on the Investor Relations page of our Geo space Dot Com website.
I encourage everyone to browse the site to learn more about geo space in our products note that the information. We record. This morning is time sensitive and may not be accurate at the time, one listens to the replay.
So yesterday after the market closed we released our financial results for the first quarter of fiscal year 'twenty 'twenty. Two the three months ended December 31, 2021 reflected a decrease in revenue of $10 million from last year's first quarter. However, last year's results were bolstered by $8 million received on our contract with.
Speaker 3: So yesterday after the market closed, we released our financial results for the first quarter of fiscal year 2022. The three months ended December 31st, 2021, reflected a decrease in revenue of $10 million from last year's first quarter. However, last year's results were bolstered by $8 million received on our contract with the US government to provide the US Board of Patrol with an advanced border security solution developed with our quantum technology sciences subsidiary. the US
The U S government to provide the U S border patrol with an advanced border security solution developed with our quantum technology Sciences subsidiary.
However, looking further back.
Speaker 3: Then last year, first quarter revenue still represents a good start for fiscal year 2022, having exceeded all first quarter results of the previous five years.
Then last year first quarter revenue still represents a good start for fiscal year 2022 having exceeded all first quarter results of the previous five years.
Speaker 3: Contributions for rentals of our OB-X ocean bottom marine nodes in the first quarter saw an increase compared to last year's same period. In addition, revenue included proceeds from the sale of more than 1,700 OB-X nodes out of our rental fleet. This purchase was made by the same international seismic contractor that last year purchased 7,500 new.
Contributions from rentals of our Obs Ocean bottom marine nodes in the first quarter saw an increase compared to last year's same period. In addition revenue included proceeds from the sale of more than 1700, Ob X nodes out of our rental fleet.
This purchase was made by the same international seismic contractor that last year purchased 7500 units.
Nonetheless, our oil and gas market segment remains challenged overall as reflected by the decrease in revenue of more than 24% compared to last year.
Speaker 3: Nonetheless, our rolling gas market segment remains challenged overall, as reflected by the decreasing revenue of more than 24% compared to last year.
We believe this is the result of exploration and production companies or E&P companies choosing to make minimal capital investments in new exploration and production despite higher oil prices.
Speaker 3: We believe this is the result of exploration and production companies or EMP companies choosing to make minimal capital investments in new exploration and production despite higher oil prices.
Speaker 3: As hard evidence, recent reports show that discoveries of new oil and gas reserves in 2021 fell to the lowest levels recorded in 75 years.
As hard evidence recent reports show that discoveries of new oil and gas reserves in 2020 , one fell to the lowest levels recorded in 75 years.
Speaker 3: ENP companies have instead directed cash toward shareholders in the form of dividends and stock buybacks, as well as toward reducing debt. We believe this trend will likely continue.
E&P companies have instead directed cash toward shareholders in the form of dividends and stock buybacks as well as towards reducing debt.
We believe this trend will likely continue for some time, we mentioned in our last earnings release that we have received a request from a major oil company for proposal of a permanent reservoir monitoring or P. R. M system, yet after a thorough evaluation certain immutable terms and conditions of the author offer let us to decide not to provide it.
Speaker 3: We mentioned in our last earnings release that we have received a request from a major oil company for proposal of a permanent reservoir monitoring or PRM system.
Speaker 3: Yet after a thorough evaluation, certain immutable terms and conditions of the author offer led us to decide not to provide a proposal.
Our proposal, however, future payer in projects with this company or still possible and our ongoing discussions and engineering work on several different P. R. M system opportunities with other customers also remain very encouraging.
Speaker 3: However, future PRM projects with this company are still possible and are ongoing discussions and engineering work on several different PRM system opportunities with other customers also remain very encouraged.
Consistent with our business diversification strategy revenue from our adjacent markets products experienced an increase of 18% in the first quarter compared to last year.
Speaker 3: Consistent with our business diversification strategy, revenue from our adjacent markets products experience an increase of 18% and the first quarter compared to last year.
Speaker 3: This is a historic level of first quarter revenue for this segment and marks a great return for the investments we've made in this portion of our business.
This is a historic level of first quarter revenue for this segment and marks a great return for the investments we've made in this portion of our business.
Speaker 3: We expect this segment to see additional revenue later this fiscal year with the rollout of our Aquana smart water valves and cloud-based control plab.
We expect this segment to see additional revenue later this fiscal year with the rollout of our quantum smartwater valves and cloud based control platform.
Speaker 3: Thus, along with other products in development to further expand our adjacent markets, this segment is very well positioned to experience additional growth.
Thus along with other products in development to further expand our adjacent markets. This segment is very well positioned to experience additional growth.
Speaker 3: And our emerging market segment, our quantum subsidiary, generated very little revenue in the first quarter compared to last year's contribution related to our US Board of Patrol efforts.
In our emerging market segment, our quantum subsidiary generated very little revenue in the first quarter compared to last year's contribution related to our U S border patrol efforts. However.
Speaker 3: However, once firm federal budgets have been established, we believe we are well positioned for follow-on border patrol work, as well as contracts with other government customers for our border and perimeter security system.
However, once firms federal budgets have been established we believe we are well positioned for follow on border patrol work as well as contracts with other government customers for our border and perimeter security systems.
Recently variants of our site our system were deployed in our joint industry partnership with carbon management, Canada. These systems are yielding valuable information toward demonstrating Seth arce capabilities for high resolution and low cost monitoring of carbon capture off your operations as well as other pathic passive seismic interests.
Speaker 3: Recently, variants of our SATAR system were deployed in our joint industry partnership with Carbon Management Canada. These systems are yielding valuable information toward demonstrating SATAR's capabilities for high resolution and low cost monitoring of carbon capture operations, as well as other passive seismic and...
Yes.
Speaker 3: And with that, I'll now turn the call over to Robert for some financial details.
And with that I'll now turn the call over to Robert for some financial details.
Thanks, Rick and good morning, before I begin I'd like to remind everyone that we will not provide any specific revenue or earnings guidance during our call. This morning.
Speaker 4: Thanks, Rick, and good morning. Before I begin, I'd like to remind everyone that we will not provide any specific revenue or earnings guidance during our call today.
In yesterday's press release, our first quarter ended December 31, 2021, we reported revenue of 18 million compared to last year's revenue of $28 five.
Speaker 4: In yesterday's press release, our first quarter ended December 31st, 2021. We reported revenue $18 million compared to last year's revenue of $28.5 million.
Our net loss for the quarter was $6 8 million or <unk> 52 cents per diluted share compared to the first quarter of last year, so that loss of $1 1 million or eight cents per diluted share a breakdown of our oil and gas market segments is as follows our traditional product revenue for the three months period ending December 31.
Speaker 4: Our net loss for the quarter was 6.8 million or 52 cents per deluded share compared to the first quarter of last year's that loss of 1.1 million or 8 cents per du.
Speaker 4: The breakdown of our oil and gas market segments is as follows.
Speaker 4: Traditional product revenue for the three month period ending December 31st, 2021 With 600,000 a decrease of 41% compared to the revenue of 1 million less last
2021, with 600000, a decrease of 41% compared to the revenue of 1 million less last year.
Speaker 4: The decrease in revenue is due to lower demand for treatment, traditional seismic sensor.
The decrease in revenue was due to lower demand for tournament traditional seismic sensor products.
Speaker 4: We expect continued load levels of demand for these products and other traditional seismic products and services until seismic exploration activity increases and there is a depletion of underutilized seismic equipment owned by our customers.
We expect continued low levels of demand for these products and other traditional seismic products and services until seismic exploration activity increases increases and there is a depletion of under utilized seismic equipment owned by our customers.
Our wireless product revenue for the quarter was $8 7 million a decrease of 26% compared to revenue of $11 7 million last year.
Speaker 4: Our wireless product revenue for the quarter was 8.7 million and a decrease of 26% compared to revenue of 11.7 million last.
The decrease in revenue was due to lower demand for obs nodal products, partially offset by higher utilization of our rental fleet.
Speaker 4: The decreasing revenue is due to lower demand for OBX nodal products partially offset by higher utilization of our rents.
Q1, 2022 revenue includes the sale of about 1700, Ob X notes to a former let's see all the same period of the prior year includes included a similar transactions for 7500 Ob X nodes.
Speaker 4: Q1 2000-22 revenue includes the sale of about 1700 OBX nodes to a former LSEE. All the same period of the prior year includes a similar transaction for 7,500 OBX.
Speaker 4: Our reservoir product revenue for the first quarter was $336,000 compared to $29,000 for the same period last year.
Our reservoir product revenue for the first quarter was 336000 compared to 29000 for the same period last year the increase in revenues due to higher demand for engineering and field services.
Speaker 4: The increase in revenues do a higher demand for engineering and field serve.
Speaker 4: We do not expect meaningful revenue for these products until we are engaged in a contract for the delivery of a permanent reservoir monitor.
We do not expect meaningful revenue for these products until we are engaged in a contract for the delivery of a permanent reservoir monitoring system.
Speaker 4: The third quarter of fiscal year 2021, we received a request from a major oil and gas producer for the implementation of a PRM system. We declined to provide a bid to the oil and gas producer due to unfavorable commercial requirements in the contract.
The third quarter of fiscal year 2021 received a request from a major oil and gas producer for the implementation.
Of our <unk> system, we declined to provide a bit to the oil and gas producer due to unfavorable commercial requirements in the country. We.
Speaker 4: We continue ongoing discussions with other major gas, oil and gas producers for possible PRNs.
We continue ongoing discussions with other major gas oil and gas producers for possible PR in systems.
Speaker 4: Moving to our adjacent market segment, our industrial product revenue for the first quarter was $8.2 million, an increase of 14% compared to last year's revenue of $6.9.
Moving to our adjacent market segment or in district industrial product revenue for the first quarter was $8 2 million, an increase of 14% compared to last year's revenue of six point.
The increase in revenue is due to higher demand for our water meter connectors and cables contract manufacturing services in industrial sensors are in engineering and supply chain groups have done an excellent job of aggressively working to mitigate COVID-19 supply chain shortage short.
Speaker 4: The increase in revenue is due to higher demand for our water meter connectors and cables, contract manufacturing services, and industrial services.
Speaker 4: Our engineering and supply chain groups have done an excellent job aggressively working to mitigate COVID-19 supply chain shortages. We will continue to work these shortages without reducing our product functionality.
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We will continue to work these sorts of shortages without reducing or.
Product functionality or integrity.
Imaging product revenue for the three months ending December 31, 2021 was $3 2 million, an increase of 27% compared when compared to two and a half a million from the same period last year.
Speaker 4: Imaging products revenue for the three months ending December 31st 2021 was 3.2 million an increase of 27 percent compared when compared to two and a half million from the same period last year
Speaker 4: Higher demand for imaging products is due to a return to mere normalcy for social gatherings.
Higher demand for imaging products is due to a to a return to near normalcy for social gatherings.
Pat required banners T shirts, and other printed materials that advertiser memory, such events produced by our customers.
Speaker 4: that require banners, t-shirts, and other printed materials that advertise or commemorate such events produced by our customers.
Revenue from our emerging market segments for the first quarter of fiscal year 2022, So 137000 compared to $8 8 million from the same period of the prior fiscal year.
Speaker 4: Revenue from our emerging market segments for the first quarter of fiscal year 2022 is $137,000 compared to $8.8 billion from the same period of the prior fiscal year.
Speaker 4: The decrease in revenue is the result of completing most of the obligations related to the contract with the U.S. Border Patrol in the first quarter of 2021.
The decrease in revenue is the result of completing most of the obligations related to the contract with you with the U S border patrol.
In the first quarter of 2021.
Although we currently do not have any additional significant significant contracts, we believe our advanced seismic acoustic technologies and innovative data analytics are in the position to provide the U S. Federal government with high technology means methods for protecting the U S border and other strategic assets.
Speaker 4: Although we currently do not have any additional significant contracts, we believe our advanced seismic acoustic technologies and innovative data analytics are in the position to provide the U.S. federal government with high technology means and methods for protecting the U.S. border and other...
Our consolidated gross profit for the first quarter was $1 7 million compared to $6 7 million last year.
Speaker 4: Our consolidated gross profit for the first quarter was $1.7 million compared to $6.7 million last year.
Speaker 4: The decrease in gross profit was due to the reduction in revenue from our emerging market segments related to our contract with the U.S. Border Patrol, as I just discussed. The decrease is also due to lower sales of our OBX wireless products, partially offset by higher rental revenue from higher utilization of our rental fleet from our oil and gas market
Kris and gross profit was due to the reduction in revenue from our emerging market segments related to our contract with us with the U S border patrol as I just discussed.
The decrease is also due to lower sales of our <unk> wireless products, partially offset by higher rental revenue from higher utilization of our rental fleet from our oil and gas market segment.
The first quarter of fiscal year 2022, operating expenses were $8 6 million. This is an increase of 5% when compared to $8 2 million for the first three months of fiscal year 2021.
Speaker 4: The first quarter of fiscal year 2022 operating expenses are $8.6 million. This is an increase of 5% when compared to $8.2 million for the first three months of fiscal year 2021.
Speaker 4: The increase is the result of higher R&D project costs, increased personnel costs, incremental operating costs from our Aquana acquisition, and an increase in general business expenses related to business operations.
The increases are the result of higher R&D project costs and increased personnel costs incremental operating costs from our quanta acquisition and an increase in general business expenses related to business operations.
Speaker 4: These increases are partially offset by a non-cash decrease in the fair value of contingent earn-out liabilities from our quantum and OptiSight efforts.
These increases are partially offset by non cash decrease in the fair value of contingent earn out liabilities from our quantum and after site acquisitions.
Speaker 4: Q1 2022 cash investments into our property, plant, and equipment is $100,000. And cash investments into our rental fleet is $800,000.
Q1, 2022 cash investments into our property plant and equipment is $100000 in cash and investments into our rental fleet is 800000.
We expect fiscal year 2022 capital investments into our rental fleet to be minimal unless new rental contracts warrant additions to our fleet and investment in property and plant equipment could be as much as $2 million for fiscal year 2022.
Speaker 4: We expect fiscal year 2022 capital investments into our rental fleet to be minimal unless new rental contracts warrant additions to our fleet, and investment in property and plant equipment could be as much as $2 million for fiscal year 2022.
Speaker 4: Our balance sheet at the end of the first quarter reflected $14.8 million of cash in short-term investment.
Our balance sheet at the end of the first quarter reflected $14 8 million of cash and short term investments. We currently have no debt and own numerous real estate holdings in Houston and around the world that are free and clear without any leverage that concludes my discussion and I'll turn the call back to Rick.
Speaker 4: We currently have no debt and own numerous real estate holdings in Houston and around the world that are free and clear without any leverage.
Speaker 4: That concludes my discussion and I'll turn the call back to Rick.
Thank you Robert.
Speaker 3: As fiscal year 2022 progresses, our oil and gas market segment will continue to face near-term commercial challenges that are difficult to forecast amidst today's uncertainties.
As fiscal year 2022 progresses, our oil and gas market segment will continue to face near term commercial challenges that are difficult to forecast amidst todays uncertainties.
Speaker 3: Looking longer term, PRM system opportunities for this segment are in active discussion and do remain very promising. And we will continue to ensure that the terms and conditions for pursuing such projects contain appropriately balanced risks.
Looking longer term P. RM system opportunities for this segment are in active discussion and do remain very promising.
And we will continue to ensure that the terms and conditions for pursuing such projects contain appropriately balanced risks.
Speaker 3: Regarding our adjacent market segment, we are excited about the performance of this segment and its consistent path of revenue growth.
Regarding our adjacent market segment, we are excited about the performance of this segment and its consistent path of revenue growth.
Speaker 3: These results give significant validation to our strategic moves to diversify our business and create revenue alternatives to our oil and gas product line.
These results give significant validation for our strategic moves to diversify our business and create revenue alternatives to our oil and gas product lines.
Speaker 3: Additional revenue alternatives reside in our emerging market segment, where the advanced security and intelligence gathering systems developed with our quantum subsidiary are providing unique solutions to the U.S. Border Patrol. And these benefits are equally extendable to other government entities.
Additional revenue alternatives reside in our emerging market segment, where the advanced security and intelligence gathering systems developed with our quantum subsidiary are providing unique solutions to the U S border patrol and these benefits are equally extended both to other government entities.
Speaker 3: We are also making headway in the migration of Quantum's SADAR system technology for use in monitoring carbon capture and storage operations.
We are also making headway in the migration of Quantum's SEDAR system technology for use in monitoring carbon capture and storage operations.
Speaker 3: This can open new revenue opportunities within our oil and gas market segment. The advanced capability of these systems could well position us as the technological leader for monitoring operations in this unique developing market of carbon capture and storage.
This can open new revenue opportunities within our oil and gas market segment. The advanced capability of these systems could well position us as the technological leader for monitoring operations and this unique developing market of carbon capture and storage.
This concludes our prepared commentary and so now I'll turn the call back over to Brittany for questions.
Speaker 3: This concludes our prepared commentary, and so now I'll turn the call back over to Brittany for questions.
Okay.
Okay.
Are you there Brittany.
Yeah.
Yeah.
Well with that I guess, we'll end our call. So we'll be looking forward to our second conference call for the second quarter of fiscal year 'twenty two.
Speaker 3: Well, with that, I guess we'll end our call, so we'll be looking forward to our second conference call for the second quarter of fiscal year 22. Thanks and goodbye.
Thanks and goodbye.
Okay.
Thank you for your participation.
This program has concluded.
You may disconnect at any time.
Okay.
Speaker 5: Once again, today's program has concluded. You may disconnect at any time.
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Today's program has concluded you may disconnect at any time.
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