Q4 2023 Geospace Technologies Corp Earnings Call
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Speaker 2: Welcome to the Geospace Technologies fourth quarter and full year 2023 Earnings Conference.
Welcome to the Geospatial technologies fourth quarter and full year 2023 earnings conference call.
Speaker 2: Hosting the call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Robert Curtis, the company's Chief Financial Officer.
Hosting the call today from Geo space is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Robert <unk>, The company's Chief Financial Officer.
Speaker 2: Today's call is being recorded and will be available on the Geospace Technologies investor relations website following the call. 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.
Today's call is being recorded and will be available on the geospatial technologies Investor Relations website following the call.
At this time, all participants have been placed in a listen only mode and the floor will be opened for your questions. Following the presentation if.
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Speaker 2: Lastly, if you should require operator assistance again, please press star zero. It is now my pleasure to turn the floor over to Rick Wheeler. So you may begin.
It is now my pleasure to turn the floor over to Rick Wheeler, Sir you may begin.
Thanks, Michael.
Speaker 3: Good morning and welcome to Geospace Technologies conference call for the fourth quarter and year end of fiscal year 2023.
Good morning, and welcome to the Geospatial Technologies conference call for the fourth quarter and year end fiscal year 2023.
Speaker 3: mentioned, I'm Rick Wheeler, the company's President and Chief Executive Officer and I'm joined by Robert Curtis, the company's Chief Financial Officer.
As mentioned I'm, Rick Wheeler, the company's President and Chief Executive Officer, and I'm joined by Robert <unk>, The company's Chief Financial Officer and.
Speaker 3: In our prepared remarks, I'll first provide an overview of the fourth quarter and year end, and Robert will then follow up with more in-depth commentary on our financial performance. After some final comments, I'll now turn it over to Robert to discuss the final report. Thank you, Robert.
In our prepared remarks, I'll first provide an overview of the fourth quarter and year end and Robert will then follow up with more in depth commentary on our financial performance.
After some final comments, we'll open the line for questions. Some of today's commentary on markets revenue recognition planned operations and capital expenditures may be considered forward looking as defined in the private Securities Litigation Reform Act of 1995 days.
Speaker 3: Some of today's commentary on markets, revenue recognition, planned operations, and capital expenditures may be considered forward-looking, as defined in the Private Securities Litigation Reform Act of 1995.
Speaker 3: These statements are based on our present awareness, but actual outcomes are affected by uncertainties we cannot control or predict. Both known and unknown risks can lead to results that differ from what is said or implied today. Some of these risks and uncertainties are discussed in our SEC Form 10-K and 10-Q-5
These statements are based on our president awareness, but actual outcomes are affected by uncertainties, we cannot control or predict.
Both known and unknown risks can lead to results that differ from what is said or implied today. Some of these risks and uncertainties are discussed in our SEC Form 10-K, and 10-Q filings for convenience, we will link a recording of this call on the Investor Relations page of our Geo space Dot Com website, which I hope everyone will visit and browse to learn a little bit about.
Speaker 3: For convenience, we will link a recording of this call on the investor relations page of our geospace.com website, which I hope everyone will visit and browse to learn a little bit about the company and our product.
The company and our products.
Speaker 3: Note that the information recorded today is time sensitive and may not be accurate at the time one listens to the...
Note that the information recorded today is time sensitive and may not be accurate at the time, one listens to the replay.
Yesterday after the market closed we released our financial results for the fourth quarter and year end of fiscal year 2023, which ended September 32023, we were incredibly pleased to announce to our shareholders yet another quarter of positive earnings.
Speaker 3: Yesterday after the market closed, we released our financial results for the fourth quarter and year end of fiscal year 2023, which ended September 30 of 2020.
Speaker 3: We were incredibly pleased to announce to our shareholders yet another quarter of positive earnings.
Speaker 3: Combined with the successful quarters earlier in the year, fiscal year 2023 closed with an overall net income of $12.2 million.
Bind with the successful quarters earlier in the year fiscal year 2023 closed with an overall net income of $12 $2 million.
Speaker 3: Moreover, full year revenue of 124.5 million dollars represents the largest figure the company has recorded since 2014.
Moreover, full year revenue of $124 $5 million represents the largest figure the company has recorded since 2014.
Speaker 3: Our improved performance is the result of accelerated efforts by our dedicated employees in reducing costs and streamlining our operations, as well as better market conditions for our products in both the oil and gas and adjacent market sectors.
Our improved performance as the result of accelerated efforts by our dedicated employees and reducing costs and streamlining our operations as well as better market conditions for our products in both the oil and gas and adjacent market segments.
Speaker 3: Increases in utilization and rentals of our OBX ocean bottom nodes were the largest revenue driver in fiscal year 2023. In fact, the company's total revenue for rentals more than doubled from last year's figure.
Increases in utilization and rentals of our <unk> ocean bottom nodes, where the largest revenue driver in fiscal year 2023. In fact, the company's total revenue from rentals more than doubled from last year's figure.
Our conservative financial management, and preservation of our strong debt free balance sheet have given us a central tools needed to maintain leadership in technology innovations even in depressed markets. We believe this has strengthened our ability to take advantage of these improving market conditions and will continue to do so in the future.
Speaker 3: Our conservative financial management and preservation of the strong debt-free balance sheet have given us essential tools needed to maintain leadership in technology innovations, even in depressed markets. We believe this has strengthened our ability to take advantage of these improving market conditions and will continue to do so in the future.
Speaker 3: This is strongly evidenced by recent developments in our oil and gas market segment. In the fourth quarter, we announced a $3 million rental agreement for our highly advanced Mariner product, which is a shallow water seabed seismic data acquisition.
This is strongly evidenced by recent developments in our oil and gas market segment in the fourth quarter, We announced a 3 million dollar rental agreement for our highly advanced Mariner product, which is a shallow water seabed seismic data acquisition.
Speaker 3: In addition, we announced a $5.7 million contract with an international seismic company for specialized geophones designed for use in their proprietary system.
In addition, we announced a $5 7 million dollar contract with an international seismic company for specialized geophone designed for use in their proprietary system.
Speaker 3: And prior to both of these announcements was our announcement in June of a $20 million rental contract for our Mariner Ocean Bottom Dome.
And prior to both of these announcements was our announcement in June of the $20 million of rental contract for our Mariner Ocean bottom nodes.
Speaker 3: We expect the delivery of this system to complete in the next few weeks with the rental term commencing thereafter.
We expect the delivery of this system to complete in the next few weeks with the rental term commencing thereafter.
Speaker 3: While we do expect gaps to occur in some of our OBX rental contracts, we anticipate the ocean bottom node market remaining strong over the coming fiscal year.
While we do expect gaps to occur in some of our <unk> rental contract, we anticipate the ocean bottom node market remaining strong over the coming fiscal year.
Speaker 3: Results from our adjacent market segment proved equally compelling as total revenue for the fourth quarter and full fiscal year ending September 30, 2023 came in at $10.6 million and $49 million respectively.
Results from our adjacent market segment proved equally compelling as total revenue for the fourth quarter and full fiscal year ending September 30th 20 twenty-three came.
Came in at $10 $6 million and $49 million respectively.
The full year amount for this segment sets yet another new company record our efforts toward revenue diversification has seen some success in the adjacent market segment, where several new quarterly records were set over the course of fiscal year 2023.
Speaker 3: The bull year amount for this segment sets yet another new company record. Our efforts toward revenue diversification have seen some success in the adjacent market segment, where several new quarterly records were set over the course of fiscal year 2023.
Speaker 3: The outstanding performance for the year of our industrial products largely stems from the greater demand for our water meter cables and connectors.
The outstanding performance for the year of our industrial products largely stems from the greater demand for our water meter cables and connectors, which was the primary factor pushing the segments overall revenue growth of 25% over last year's results.
Speaker 3: which was the primary factor pushing the segment's overall revenue growth 25 percent over last year's results.
Speaker 3: The company's emerging market segment generated $0.8 million in the fourth quarter and $1.2 million over the full 2023 fiscal year.
The company's emerging market segment generated <unk> 8 million in the fourth quarter and $1 2 million over the full 20 twenty-three fiscal year.
Speaker 3: During the second fiscal quarter, we announced a $1.5 million contract with the Defense Advanced Projects Research Agency, otherwise known as DARPA.
During the second fiscal quarter, we announced a 1.5 million dollar contract with the defense advanced projects Research agency, otherwise known as DARPA.
Speaker 3: This contract is a Phase II Small Business Innovative Research, or SBIR, contract to explore a new SADAR capability designed to monitor acoustic energy sources of interest on nearby land, water, and air environments.
This contract is a phase two small business innovative research our S. B I R contract to explore a new site or a capability designed to monitor acoustic energy sources of interest on nearby land water and air environments.
Revenue over the course of fiscal year 2023.
Speaker 3: Revenue over the course of fiscal year 2023 for this segment includes amounts derived from this contract, as well as fulfillment of a separate unrelated contract with a major defense contract.
For this segment includes amounts derived from this contract as well as fulfillment of a separate unrelated contract with a major defense contractor.
Speaker 3: We continue to explore further opportunities for contracts with DARPA and other governmental agencies.
We continue to explore further opportunities for contracts with DARPA and other governmental agencies as well as new private sector applications for sei to our in quantum's unique analytics and the energy transition market.
Speaker 3: as well as new private sector applications for SADR and Quantum's unique analytics in the energy transition.
Speaker 3: Complementing our operational success in fiscal year 2023 were substantive gains on the company's balance sheet. In addition to increasing stockholder equity by more than $11 million, we ended fiscal year 2023 with a total of $33.7 million in cash, cash equivalents and short-term investments.
Complementing our operational success in fiscal year 2023 were substantive gains on the company's balance sheet. In addition to increasing stockholder equity by more than $11 million. We ended fiscal year 2023, with a total of $33 $7 million in cash cash equivalents and short term investments.
We further maintained an additional borrowing availability of $13 $1 million under an unused bank credit agreement with no borrowings outstanding.
Speaker 3: We further maintained an additional borrowing availability of $13.1 million under an unused bank credit agreement with no borrowings outstanding.
Speaker 3: As a result, our total liquidity as of September 30th, 2023, was $46.8 million. In addition, we own wholly unencumbered properties and real estate in both domestic and international locations.
As a result, our total liquidity as of September 30th 2023 was $46 $8 million. In addition, we own wholly unencumbered properties in real estate in both domestic and international locations.
Speaker 3: With that, I'll now turn the call over to Robert to give a little bit more financial detail on the fourth quarter in year-end.
With that I'll now turn the call over to Robert to give a little bit more financial detail on the fourth quarter and year end performance.
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.
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: In yesterday's press release for our fourth quarter in September 30th, 2023, we reported revenue of $29.3 million compared to last year's revenue of $25.9 million.
In yesterday's press release for our fourth quarter ended September 32023, we reported revenue of $29 3 million compared to last year's revenue of $25 9 million.
Speaker 4: The net income for the quarter was $4.4 million, or $0.33 per diluted share, compared to last year's net loss of $8 million, or $0.62 per diluted share.
Net income for the quarter was $4 4 million or <unk> 33 per diluted share compared to last year's net loss of $8 million or 62 cents per diluted share.
Speaker 4: For the 12 months ended September 30th, 2023, we reported revenue of $124.5 million compared to revenue of $89.3 million.
For the 12 months ended September 32023, we reported revenue of $124 5 million compared to revenue of $89 3 million last year.
Speaker 4: Our net income for the 12 month period was $12.2 million, or 92 cents per diluted share, compared to last year's net loss of $22.9 million, or $1.76 per diluted...
Our net income for the 12 month period was $12 2 million or 92 cents per diluted share compared to last year's net loss of $22 9 million.
Dollar 76.
Sure.
The old oil and gas market segment produced revenue of $17 8 million for the three months ended September 32023.
Speaker 4: The oil and gas market segment produced revenue of 17.8 million for the three months ended September 30th, 2023. This compares with revenue of 14.8 million for the same period of the prior fiscal year, an increase of 25.5 million for the year ended September 30th, 2023.
This compares with revenue of 14 8 million for the same period of the prior fiscal year, an increase of 20%.
Speaker 4: For the 12-month period, the segment contributed revenue of $74 million versus $49.1 million for the same prior year period.
For the 12 month period. The segment segment contributed revenue of $74 million versus $49 1 million for the same prior year period.
Speaker 4: The increase for the three-month period is due to higher utilization of our OBX rental fleet.
The increase for the three months period is due to higher utilization of our <unk> rental fleet increased sales of wireless seismic products.
Speaker 4: increased sales of wireless seismic products, and higher demand for our marine products.
And higher demand for our marine products.
The 12 month increase in revenue is due to a high high level utilization of our obs rental fleet increased sales of our seismic sensor and also of our marine products.
Speaker 4: The 12 month increase in revenue is due to high level utilization of our OBX rental fleet, increased sales of our seismic sensor and also of our marine products.
Speaker 4: Our adjacent market segment revenue is as follows. Our industrial product revenue for the fourth quarter of fiscal year 2023 was $7.6 million compared to $7.2 million for the fourth quarter of 2023.
Our adjacent market segment revenue is as follows our ambition industrial product revenue for the fourth quarter of fiscal year, 2023 was $7 6 million compared to $7 2 million for the fourth quarter of 2022.
Speaker 4: Industrial products 12-month revenue for fiscal year 2023 was $36.9 million, an increase over the same period in 2022 of $4.8 million.
Industrial products 12 month revenue for fiscal year 'twenty two 'twenty three was $36 9 million an increase over the same period in 2022.
<unk>, 44%.
Speaker 4: Both periods revenue increases are due to higher sales of our water meter cable and connector products.
Both periods revenue increases are due to higher sales of our water meter cable and connector products.
Speaker 4: Imaging product revenue for the fourth quarter was 3 million, a decrease of 18% compared to last year's revenue of 3.7
Imaging product revenue for the fourth quarter was $3 million, a decrease of 18% compared to last year's revenue of $3 7 million.
Speaker 4: 12-month revenue for imaging products for fiscal year 2023 was $12.1 million versus $13.5 million for the same period in 2020.
The 12 month revenue for imaging products for fiscal year, 2023 was $12 1 million versus $13 5 million for the same period in 2022.
Speaker 4: The decrease in revenue for both periods is due to lower demand for our thermal imaging equipment and consumable film problems.
The decrease in revenue for both periods is due to lower demand for thermal imaging equipment and consumable film products.
Finally revenue from our emerging market segment for the fourth quarter was 800000 compared to 100000 for the same period in 2022 to 12 month revenue for this segment for fiscal year 2023 was $1 2 million compared to 700000 for the same prior year period.
Speaker 4: Finally, revenue for our emerging market segment for the fourth quarter was $800,000 compared to $100,000 for the same period in 2022. The 12-month revenue for this segment for fiscal year 2023 was $1.2 million compared to $700,000 for the same prior year period.
<unk>.
Speaker 4: This segment has a backlog of approximately $2 million that will be recognized in fiscal year 2020.
This segment has a backlog of approximate lead to $2 million that will be risk recognized in fiscal year 2024.
Speaker 4: Excluding non-cash decreases to the fair value of contingent earn-out liabilities and non-cash goodwill impairment, both recorded in fiscal year 2022, our operating expenses modestly increased by $500,000 for the fourth quarter and decreased by $200,000 for the 12-month period of 2022.
Excluding noncash decreases to the fair value of contingent earn out liabilities and noncash and a noncash goodwill impairment both recorded in fiscal year 2022, our operating expenses modest modestly increased by 500000 for the fourth quarter and decreased.
By 200000 for the 12 month period of 2023.
Our 12 month cash investments into our rental fleet was $9 9 million in cash investments into property plant and equipment was $4 million.
Speaker 4: 12 month cash investments into our rental fleet was $9.9 million and cash investments into property plant and equipment was $4 million.
Speaker 4: fiscal year 2024, we anticipate and best approximately 9 million into our rental fleet and 4 million into into property plant and equipment.
In fiscal year, 2024, and we anticipate 10, best approximately 9 million into our rental fleet and $4 million into into property plant and equipment.
Our balance sheet at the end of the fourth quarter reflected $34 million of cash and short term investments and we have 13 million of additional liquidity from our credit facility.
Speaker 4: Balance sheet at the end of the fourth quarter reflected 34 million of cash and short term investments. And we have 13 million of additional liquidity from our credit.
Speaker 4: Additionally, on numerous real estate holdings in Houston and around the world that are free and clear without any
In addition, we own numerous real estate holdings in Houston and around the world that are owned free and clear without any leverage that concludes my discussion and I'll turn the call back to Rick. Thank you Robert.
Speaker 4: That concludes my discussion and I'll turn the call back to Rick. Thank you, Robert.
As we enter the new fiscal year, we're enthusiastic about the plans we set in motion to continue being profitable as a part of that we intend to regularly evaluate each business segment with our efforts focused on driving revenue opportunities and assessing additional areas where costs can be reduced however, it must be noted that time gaps.
Speaker 3: As we enter the new fiscal year, we're enthusiastic about the plans we've set in motion to continue being profitable. As a part of that, we intend to regularly evaluate each business segment, with our efforts focused on driving revenue opportunities and assessing additional areas where costs can be reduced.
Speaker 3: However, it must be noted that time gaps in our performing seismic industry contracts are likely to result in uneven revenue for portions of the coming year.
Our performing seismic industry contracts are likely to result in uneven revenue proportions of the coming year <unk>.
Speaker 3: Despite this expected variability, though, we remain encouraged by the volume of planned exploration activity during the year and the resultant demand for our products it should create.
Despite this expected variability, though we remain encouraged by the volume of planned exploration activity during the year and the resulting demand for our products it should create.
Speaker 3: In conjunction with an approved market, we believe our strong balance sheet and technological leadership will be pivotal to our success in fiscal year 2024.
In conjunction with an approved market, we believe our strong balance sheet and technological leadership will be pivotal to our success in fiscal year 2024.
This concludes our prepared commentary and now I'll call the.
Turn the call back over to Michael for any questions from our listeners.
Speaker 2: Thank you. The floor is now open for questions.
Thank you the floor is now open for questions. At this time, if you have a question or comment. Please press star one on your telephone keypad.
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Yes.
And once again that was star one if you had any questions or comments.
Speaker 5: And once again, that was star 1, if you had any questions or comments.
And we do have our first question from Martin Lorenzen.
A private investor.
Good morning, Texas.
Hi, How're you Martin.
I'm fine. Thank you can you. Please elaborate on the significance of your iPhone quanta collaboration yield.
<unk> had a volatile and I think June of this year to what degree does it drive your revenue volume within that watch us.
Speaker 3: Well, that development is very recent, so it really hasn't manifested into hard revenue as of yet, but we certainly anticipate that it will. It's a great partnership. It puts our quantum valves into a distribution environment that should be very healthy. I can't give you exact numbers on that, but look forward.
Well that development is very recent so it really hasn't manifested into a hard revenue as of yet, but we certainly anticipate that it will it's a great partnership it puts our upon of valves.
Into our distribution environment that should be very healthy. So I can't give you exact numbers on that but look forward to it.
Speaker 6: Great, that's good to hear that it hasn't materialized yet in the numbers.
Right. So that's good to hear that it hasn't materialized yet in the numbers so and.
Speaker 6: I guess on the product side, how long would be the life cycle of such a water meter?
I guess on the on the product sides Hum.
How long would be the lifecycle of us such a watch them Utah.
Speaker 3: Actually, these systems are designed for at least 20 years of operation, typically. There is a component that sometimes needs to be replaced after maybe a decade or so, which is a battery that drives some of the electronics in these smart meters, as it were. But they are designed for quite a long duration.
Actually these these systems are designed for at least 20 years of operation are typically there is a component that sometimes needs to be replaced after maybe a decade or so which is a battery that drives some of the electronics and these smart meters are as it were but.
They're designed for quite a long duration.
Speaker 6: Would it be safe to assume that the product is relatively sticky and that your customer base...
So would it be safe to assume that the product is relatively sticky in that your customer base.
Speaker 6: won't erode over time once you gain my...
Loans erode over time once you.
You gain market share there.
Speaker 3: Well, there are always dynamics in any sort of market as competition comes up, as processes change, and approaches change to a technology, such as smart water.
Well there are always dynamics in any sort of market as competition comes up as a process change and and approaches change to a technology.
Such as smart water metering, but our belief is that the smart city expansion that we see really throughout the country actually throughout the world.
Speaker 3: But our belief is that the smart city expansion that we see really throughout the country, actually throughout the world with respect to these types of instruments and valves, as well as outside of the water industry. But we expect this to be an ongoing part of our business for some length of time.
With respect to these types of instruments and.
<unk> as well as our outside of the water and it should be we expect this to be an ongoing part of our business for some length of time.
Okay, and so you.
Try to roll it out in certain geographies are.
Speaker 6: try to roll it out in certain geographies where you think.
What do you think is the.
Speaker 6: the market is under-penetrated or how do you roll out that product.
The market is underpenetrated. So how do you how do you roll all that.
Got it.
Well, it's definitely underpenetrated as it turns out in the smart meter our industry are the water side of that a fair as opposed to electricity and gas has generally been a lagger in and that sort of deployment.
Speaker 3: Well, it's definitely underpenetrated. As it turns out, in the smart meter industry, the water side of that affair, as opposed to electricity and gas, has generally been the lagger in that sort of deployment.
Speaker 3: The way you roll it out is through market penetration as in any other market, through your sales efforts, your marketing efforts, and demonstrating the technology.
The way you rolled it out is through market penetration and then he as in any other market.
Your sales effort to your marketing efforts and demonstrating the technology.
Okay. Thank you.
Youre welcome.
And just a reminder, that was star one with any questions and comments and our next question comes from Bill <unk> with Titan capital.
Speaker 2: And just a reminder, that was star one with any questions and or comments. And our next question comes from Bill Desilam with Titan Capital.
Thank you just quickly following up on the last question when does the <unk> contract.
Speaker 7: Thank you. Just quickly following up on the last question, when does the ITRON contract begin producing meaningful revenue?
Producing meaningful revenue.
I'm not going to tell you that bill because there are some things in place there that we're not really privy eat to reveal as it relates to our partnership with icon, but we don't anticipate it's going to be some lengthy period of time I Tron is a well known organization and certainly has these contracts already in place that will.
Speaker 3: I'm not going to tell you that, Bill, because there are some things in place there that we're not really privy to reveal as it relates to our partnership with ITRON. But we don't anticipate it's going to be some lengthy period of time. ITRON is a well-known organization and certainly has these contracts already in place that will take place shortly in terms of their deployment.
Take place shortly in terms of their deployments.
Speaker 3: Okay, not to pin you too far into a corner, but fiscal 24 you would anticipate that to begin Yes, we do expect to see returns on that in fiscal year 2024 exactly, right?
Okay not to pin you too far into a corner, but fiscal 'twenty four you would anticipate that to begin.
Yes, we do expect to see our returns on that in fiscal year 2024 exactly right.
Speaker 7: Okay, that's helpful. Moving along, if I may, the...
Okay. That's that's helpful.
Moving along if if.
If I may.
The.
Speaker 7: Utilization, I think Robert, you'd mentioned the utilization for your offshore rental fleet was high. What was the utilization rate in fiscal Q4?
Utilization.
Robert You had mentioned that the utilization for your offshore rental fleet was high.
What was the utilization rate in fiscal Q4.
Hi is very similar to fiscal year.
Speaker 4: High is very similar to fiscal year, very similar to Q3. It's not at full capacity, very close to full capacity.
Very similar to Q3.
If not at full capacity very close to full capacity.
Speaker 7: And so, that may then explain my next question, which you all have been very cautious about the spending that you will
And so that May then explain.
Explain my next question, which you all have been very cautious about their spending.
That you will.
Speaker 7: that you will have to build out your rental fleet, and yet you've talked about, I think, nine million additions to the rental fleet. So, would you talk to what you are seeing in terms of demand that is leading to that?
That you will have to build out your rental fleet and yet you've talked about I think $9 million.
Additions to the rental fleet. So would you talk to what you are.
What you are seeing in terms of demand that is leading to that.
Speaker 4: Well, those additions are specifically related to the mariners for the contracts we received this fiscal year.
Well those editions are specifically related to the Mariners for the contracts. We have received this fiscal year.
Speaker 4: So as you know, that's a new type of node we introduced to the market. And to fulfill those contracts, we have to add those units.
So as you know those are that's a new type of note, we introduced to the market and to fulfill those contracts we have to add those units.
To our fleet.
And speaking as Mariner your $20 million contract that youre going to have delivered here shortly.
Speaker 7: And speaking of Mariner, your $20 million contract that you're going to have delivered here shortly, that rental lasts how long with the initial period?
That rental last how long with the initial period.
Year long rental.
And would it be correct to simply take $20 million divide it by by four quarters in and you're just going to be roughly $5 million a quarter is or is are there some meaningful nuances that make that math.
Speaker 7: And would it be correct to simply take 20 million divided by four quarters and it's going to be roughly 5 million a quarter? Or are there some meaningful nuances that make that math completely off base?
Completely off base.
Speaker 4: There's some slight nuances that makes that math not work exactly that way.
There is some slight nuances that makes that math that work exactly that way.
Speaker 4: Does it ever we're going to complete delivery of the units during this quarter as Rick said So we're not going to have an entire quarter of rent for on that contract. It doesn't really begin until You know within our fourth our first
Okay.
We're going to complete delivery of the units bearing this quarter as Rick said, so we're not going to have.
An entire quarter of rent from that contract it doesn't really begin until.
Within our fourth our first quarter of 'twenty four.
Speaker 7: And then at that point, it's roughly $5 million per quarter going forward. Yeah, I would think so, yes.
And then at that point, it's roughly $5 million per quarter going forward.
Yeah, I would think so yes, yes, okay. Thank you and then.
Speaker 7: The $9 million CapEx, how much of that is tied to this contract versus additional business that you anticipate building?
The $9 million Capex, how much of that is tied to this contract versus additional business that you anticipate.
Anticipate building.
The majority of it is for this contract.
So yes, if over the course of the next year, you end up with additional business.
Speaker 7: And so if over the course of the next year you end up with additional business that
Is that.
Speaker 7: that wants to ramp up prior to Calendar 25, then you would need to build additional units.
That wants to ramp up prior to.
Two calendar 'twenty five.
You would need to build additional additional units.
Speaker 4: That's exactly right. We continue our diligence to ensure that this mark is growing and support the additional nodes before we just go and build them. We don't want to build something that's just going to gather dust.
That's exactly right, we continue our diligence to ensure that.
This market is growing kind of support the additional notes before we just go and build them. We don't want to build something that's just going to gather to us I mean to add some color to what you're you're.
Speaker 3: I mean, to add some color to what you're asking, Bill, and what Robert really has answered, we're always very cautious about making these capital investments. And so the numbers as we reported them are a static view of where we are now and a forthcoming of exactly where things are. That does not mean that if business does not come to us in the future that we won't make any, we'll limit ourselves to that investment and miss the opportunity.
Asking bill and what Robert really has answered we're always very cautious about making these capital investments and so the numbers as we reported them or.
It's a static view of where we are now in.
A forthcoming of exactly where things are that does not mean that the business does not come to us in the future that we won't make any will limit ourselves to that investment and miss the opportunity, but this is a.
Speaker 3: But this is a correct snapshot of where we.
Correct snap shot of where we are today.
Great. Okay. That's that's helpful. So kind of using that phrase because youre hitting what I'm looking for kind of a snapshot.
Speaker 7: Great. Okay, that's helpful. So kind of using that phrase, because you're hitting what I'm looking for, kind of a snapshot, correct me if I'm not summarizing this correctly. The OBX has had essentially full utilization Q3 and Q4, and Mariner will have full utilization starting in March.
Correct me, if I'm, if I'm not summarizing this correctly the obs has.
<unk> full utility <unk> full utilization Q3 and Q4.
And Mariner will have full utilization starting in March.
Speaker 7: So my question then, if those two statements are accurate, is do you anticipate that OBX will maintain full utilization roughly with the standard disclaimers that go in with contract gaps, et cetera, here in the December quarter and moving forward into the foreseeable future?
So my question then is if those two <unk>.
These statements are accurate is do you anticipate that <unk> will maintain full utilization.
Roughly.
The standard disclaimer.
Go in with contract gaps et cetera.
Here in the December quarter, and moving forward into the foreseeable future.
Speaker 3: No, we do not. That is exactly the reason we mentioned that with respect to some of the OBX equipment that's currently in service, there will be some gaps and those will be notable and they will, you know, change revenue in different portions of the year as those gaps occur, but we do see the overall market is remaining strong even though those gaps will occur, that the OBXs will go back into service on those or other contracts that are being booked as we speak.
No we do not that it is exactly the reason we mentioned that with respect to some of the <unk> equipment that is currently in service there will be some gaps and those will be notable and they will change revenue in different portions of the year as those gaps occur, but we do see the overall market is remaining strong even though those gaps will occur.
<unk> will go back into service on those or other contracts.
That are being booked as we speak.
Okay that is helpful. And then if I may I'd like to jump to a couple of quantum questions. The first one is the.
Speaker 7: Okay, that is helpful. And then, if I may, I'd like to jump to a couple of quantum questions. The first one is the 2 million backlog with the emerging markets. Is that the DARPA business, or is that something else?
The 2 million backlog.
With the emerging markets is that DARPA business or is that something else.
Speaker 4: It's a combination of DARPA business and something else.
It's a combination of DARPA business and something else.
Would you like to elaborate on to something else.
Speaker 4: Would you like to elaborate on the something else? I don't think we've announced the something else. It's, you know, it's related.
I don't think we've announced the something else.
It's.
It's related to.
Speaker 4: maintenance and technical assistance on some contracts we've performed on in the past.
Maintenance and assistance technical assistance on some.
Contracts, we performed on in the past.
Speaker 7: Thank you. And then, what opportunities, if any, do you see developing for quantum with the situation in Gaza?
Thank you and and then.
What opportunities if any do you see developing for quantum with the situation in Gaza.
Speaker 3: Well, that's yet to be seen. Clearly, there were already some track records with respect to how Israel approached some of its perimeter monitoring and all that. It didn't necessarily work, as we now understand, and partly...
Well that that's yet to be seen clearly there were already some track records with respect to how Israel approached some of its.
Perimeter monitoring and all that it didn't necessarily work as we now understand and partly a.
Speaker 3: is an element of this intelligence failure that has been pronounced in some of that activity. It will remain to be seen whether that will have an impact on quantum in the future.
It is an element of this intelligence failure that has been pronounced and some of that activity. So we will have to.
It will remain to be seen whether that will have an impact on quantum in the future.
And Rick that was part of my question what was it the equipment itself that they had did not work or was it that the intelligent services did not respond quickly enough. Yes. It is.
Speaker 7: And Rick, that was part of my question. Was it the equipment itself that they had did not work, or was it that the intelligence services did not respond quickly enough? I guess it's an equipment versus a human misstep question. That's an excellent question, but unfortunately, it's one I have no answer for. OK. Thank you both for the time. You bet, Bill. Thank you, Bill.
Any equipment versus a human.
Miss step question.
An excellent question, but unfortunately, it's one I have no answer for.
Okay. Thank you both for the time.
You bet Bill Thank you Bill.
And we have our next question from Dennis Scannell with Rutabaga capital.
Speaker 4: Yes, good morning gentlemen. Just a couple quick things for me. So following on some questions about the rental business, which has really been a standout performer for the year. So one of the things that I did notice was that, you know, boy, a real nice improvement in gross margins.
Yes, good morning, gentlemen, just a couple of quick things for me.
So following on some.
Some questions about the rental business, which has really been a standout performer for the year. So one of the things that I did notice was that a real nice improvement in gross margins.
Speaker 8: Really on a sequential basis, looking at a quarter by quarter, starting your fiscal year at like 54.9%, exiting at 76.5%.
On a sequential basis looking at a quarter by quarter, starting the your fiscal year at like 54, 9% exiting at 76, 5%.
Speaker 8: And so I'm just kind of curious, was that because of different utilizations? Was it because of pricing action taken through the course of the year? Yeah, if you could just just shed some some light on that. I, you know, I think
And so I'm just kind of curious was that because of different utilizations was it because of pricing action taken through the through the course of the year yes.
Yes, if you could just just shed some light on that.
Hi.
A lot of it is.
Speaker 4: has a lot to do with utilization. Units that are out in a customer's hands don't require us to repair them, keep them charged, or do other activities that drag down a unit, drag down the gross profit for items that are out on rent when we have things sitting here on the shelf.
Has a lot to do with utilization units that are out in the customers' hands don't require us to repair them keep them charged or do other activities that that dragged down unit drag down the gross profit for items that are out on rent.
When we have things sitting here on the shelf.
Speaker 4: So yeah, so that's part of it. We also had.
Yeah. So that's part of it we also had.
Speaker 4: you know, across the company as a whole, a higher utilization of the factory, because we're building these mariners that are going out into this customer's hands. So as a result of that, we have...
Across the company as a whole or higher utilization utilization of the factory.
Because we're building these mariners that are going out into this customer's hand, so as a result of that we have.
Speaker 3: higher utilization out on the factory floor, higher absorption of fixed costs, which improves gross profit also. I think, too, the move that we made of bringing our Lankfield facility over into our Pine Mott location certainly was a cost-reducing mannerism as well, which is going to contribute to gross market.
Higher utilization out on the factory floor higher absorption of fixed costs, which improved gross profit also I think okay.
The moves that we've made.
Bringing our langfield facility over into our Pine mine location.
It certainly was a cost reducing mannerism as well, which is going to contribute to gross margin excellent. Okay. Okay.
Speaker 8: Okay, but the overhead absorption from the production and the plant consolidation, wouldn't that be captured in the product gross margin as opposed to the rental gross margin?
But but.
But the overhead absorption from the production and the plant consolidation that wouldn't that be captured in the product gross margin as opposed to the rental gross margin.
Thanks, Tony.
Speaker 3: From a maintenance point of view, as Robert pointed out, when those units are here, then they require maintenance in terms of keeping them charged, touching them, various things that go on when they're in our hands and not in the hands of the customers. Those costs were being absorbed by what went on at Langfield. Now they're going on here, and so that gives a little bit better control of them. Okay. Okay.
From a maintenance point of view as Robert pointed out when when those units are here than they require maintenance.
So keeping charge touching them there are various things that go on when they're in our hands and not in the hands of the customers those costs were being absorbed by what went on line field now theyre going on here and so that gives a little bit better.
Control of them.
Okay. Okay. So.
Speaker 8: And again, looking at just the rental gross margins, you know, exiting the year at 76 percent.
And again looking at just the rental gross margins.
Exiting the year at 76%.
Is that something that we can look for going forward or was that kind of an extraordinary performance in the fourth quarter and.
Speaker 8: Is that something that we can look for going forward or was that kind of an extraordinary performance in the fourth quarter and, you know, no mid 60s 60 to 60 to 65% is more, you know, a normal level on a go forward basis.
No mid sixties 60, 60% to 65% is more.
Normal level on a go forward basis.
Speaker 4: Um, you know, there's going to be factors that affect that, you know, obviously utilization is going to affect that, um, you know, we have these new units coming into the fleet that are going to have fresh depreciation. That's going to, that's going to affect that also. So, I think this last quarter just has the benefit of.
Hi, there.
There's going to be factors that affect that obviously.
Obviously utilization is going to affect that.
We have these new units coming into the fleet that are going to have fresh depreciation that's going to that's going to affect that also I think.
This last quarter. It just has the benefit of.
Speaker 3: You know just really favorable things happening, and I wouldn't expect that going forward I think as well You know we mentioned that there will be some gaps in some of the OBX rentals that means they're going to be back here And so we're going to have some higher expenses in the maintenance of that so there's going to be some ebb and flow to that That makes it a little bit unpredictable
Just really favorable things happening and I wouldn't expect that going forward I think as well we mentioned that there will be some gaps in some of the <unk> rentals that means theyre going to be back here and so we're going to have some higher expenses and the maintenance of that so there's going to be some ebb and flow to that that makes it a little bit unpredictable absolutely okay.
Speaker 8: Okay, yeah, no, that's fair. So, and do you see the Mariner nodes is kind of cannibalizing OBX?
That's fair so and do you see the Mariner nodes is kind of cannibalizing <unk> potential.
Speaker 3: Well, the market is in an expansive mode at this point. I mean, the ocean bottom node in the marine seismic industry is really where most of the activity and any sort of growth seems to be at this point. There is improvements overall in the marine industry, including some of the towed streamer operations, so I don't want to imply that there's nothing going on there. But I do think that...
Potential well the bark market the market isn't the good question. The market is in an expansive mode. At this point I mean, the ocean bottom node in the marine seismic industry is really where most of the activity in any sort of growth seems to be at this point. There is improvements overall in the marine industry, including some of the towed streamer operations.
<unk>, so I don't want to imply that there's nothing going on there, but I do think that.
Speaker 3: The extreme data quality that the library houses and the oil companies have grown now accustomed to from this ocean bottom data really makes them the preferred method whenever possible to do these seismic surveys.
The extreme data quality that the library houses and the oil companies have grown now accustomed to from this ocean bottom data really makes them the preferred method whenever possible.
Do these seismic surveys so I don't know that Theres, a cannibalization I wouldn't really call. It call. It that I think there is a mix.
Speaker 3: So I don't know that there's a cannibalization. I wouldn't really call it that. I think there is an expansion going on in the market. Clearly, the Mariner will serve in the same functional role as the OBX, so it has that capability of displacing it. But it's new technology as well. It has features that the OBX doesn't have, and that should extend its acceptance further into the market.
An expansion going on in the market clearly the Mariner will.
Serve in the same functional role as the <unk>. So it has that capability of displacing it but it's new technology as well it has.
Features that <unk> doesn't have and that should.
Extend its acceptance.
Further into the market.
Speaker 8: Yep. Okay. Fair enough. And then just maybe to push you a little bit on capital allocation, you know, you finished a great year, you know, relative to the recent past.
Yes, Okay fair enough and then just maybe to push you a little bit on capital allocation.
You finished a great year.
Relative to the recent past you know.
Speaker 8: You know, you look like a real company. We've got gap net income, really nice cash flow generation, a very attractive multiple. You're trading above book value now, but you're sitting there with 33 million in cash. And if we're looking at strong market demand and, you know, some spending that we're doing on our rental fleet, is it time to think about repurchasing stock or, you know, just kind of thinking about if you could help us think about your capital allocation strategy?
It looked like a real company, we've got GAAP net income really nice cash flow generation.
<unk>, a very attractive multiple you're trading above book value now, but youre sitting there with $33 million in cash and if we're looking at at strong market demand.
I'm spending that we're doing on our rental fleet.
Is it time to think about repurchasing stock or.
Uh huh.
Just kind of thinking about it if you could help us think about your capital allocation strategy going forward.
Speaker 3: No, that's certainly something that our board considers on a regular basis. We do want to make sure in our conservative management, which we mentioned before, is something that keeps us where we are, to be debt-free and to be able to fund our operational components as we go forward.
No that's certainly something that our board considers on a regular basis.
We do want to make sure and our Conservative management, which we mentioned.
Before is something that.
It keeps us where we are to be debt free and to be able to fund our operational components. They go.
As we go forward so.
Speaker 3: So that doesn't preclude the possibility of a stock buyback, again, similar to what we did before. But we will be very cautious about that. But the board will be considering that, as it always does over the course of.
That doesn't preclude the possibility of a stock buyback again.
Similar to what we did before but we'll be very cautious about that but the board will be considering that as as it always does over the course of time.
Speaker 2: Okay, okay. Fair enough. Good luck. Thanks again. All right. Thank you. Appreciate it. Thank you. And we have our next question.
Okay, Okay fair enough good luck.
Thanks Scott.
Alright, Thanks I appreciate it thank you.
And we have a next question from Scott Bundy with Morgan Cabinet.
Good morning, guys.
Speaker 9: Morning guys. A couple questions. Good morning. Are there minimum volume associated with the contract with ITRON?
Good questions good morning.
Are there minimum volume.
Associated with the contract with icon.
Minimum volumes I don't think we have anything any terms or conditions or anything along that line.
Speaker 3: Minimum volumes, I don't think we have anything, any terms or conditions or anything along that line in these business.
And these are business arrangements.
Speaker 9: Okay. And Robert, non-current inventories jumped a bunch. Can you explain what non-current inventories are?
And Robert non current inventories jumped up a bunch can you explain what non current inventories are.
Its inventory that we.
Speaker 4: We don't expect to consume within the next 12 months using our historical usage as an indicator of what could happen in the past.
We don't expect to consume within the next 12 months using our historical usage as an indicator of what we what could happen in the past.
Speaker 4: And, you know, to be frank, what a lot of that increase in inventory, it's related to components to build items that are going to go into our rental fleet, which is a non-current asset to begin with. So we're placing those components that are likely going to end up as a non-current asset in the non-current inventory.
And to be Frank what a lot of that increase in inventory is related to components to build items that are going to go into our rental fleet, which is a non current asset to begin with so we're placing those components that are likely going to end up as a non current asset in the non current inventory.
Speaker 9: So that would be Mariner, for example? For example, yes, sir.
So that would be Mariner for example for.
For example, yes sir.
Okay got it.
Speaker 9: So, Rick, last quarter regarding quantum...
Yes.
So Rick last quarter regarding quantum.
Speaker 9: You made reference to the fact that there may be more clarity on some of the endeavors in the near future related to perimeter security, energy transition, carbon, geothermal mining, et cetera.
You made reference to the fact that there may be more clarity on some of the endeavors in the near future.
Related to perimeter security energy transition carbon geothermal mining et cetera.
Sure.
Speaker 9: So what's fascinating to me are the job openings at Quantum.
So what's fascinating to me are the job openings at quantum.
Speaker 9: uh... can you give us but no board allows the kind of job openings that you guys are having without some visibility can you give us some idea of what's going on there
Can you give us no board allows kind of job openings that you guys are having without some visibility can you give us some idea of what's going on there.
Well I mean these contracts that were already working on has certain requirements to it and we've actually had.
Speaker 3: Well, I mean, these contracts that we're already working on have certain requirements to it and we've actually had, you know, some talent that
Some talent.
<unk>.
Speaker 3: Unfortunately, we had someone pass away in one circumstance, so there are some definite technical skills that we need to re-shape.
Unfortunately, we had some one pass away in in one circumstance. So there are.
Some definite technical skills that we need to.
<unk> reef.
Speaker 3: re-assess and put back in place. So I think that's where these are with respect to these technical matters that we need those scientists for.
<unk> assess and put back in place so.
That's where these are.
With respect to these technical matters that we need those scientists for.
And the more clarity part.
Speaker 9: And the more clarity part, do we have more clarity about some of these?
Do we have more clarity about some of these.
Okay.
Speaker 3: We do, but it's not something we can yet discuss. I mean, the three months between then and now is just not enough to have that manifest. But the pipeline of those discussions that we're having for some of these things is definitely deepening. And I know that sounds frustrating, but it's just the way it is. We can't really talk about some of these things.
We do but it's not something we can get discuss I mean, the three months, but between then and now is just not enough to have that manifest but the pipeline of those discussions that we're having for some of these things is definitely deepening.
And I know that sounds frustrating, but it's just the way. It is we can't really talk about some of these things at this point.
Speaker 9: PRM, do we hear anything regarding the outlook regarding PRM?
Prs <unk>.
Do we hear anything regarding the outlook regarding PRN.
Speaker 3: We do, those discussions are very active and in fact we're even having some more discussion.
We do those discussions are very active and in fact, we're even having some.
More discussions, but the thing is is none of those are going to generate any revenue in fiscal year 2024, and so that's not anything anyone should anticipate to be the case, there is likely to be some tenders that come out in fiscal year 2024, they're not going to generate any revenue within that year, though they will be for future deploy.
Speaker 3: But the thing is, is none of those are going to generate any revenue in fiscal year 2024. And so that's not anything anyone should anticipate to be the case. There is likely to be some tenders that come out in fiscal year 2024. They're not going to generate any revenue within that year, though. They will be for future deployments. But you likely will hear about some tenders coming out in the next year.
But.
Likely we'll hear about some tenders coming out in the next year.
Speaker 9: And are we talking multiple tenders?
And are we talking.
Multiple tenders.
Speaker 3: That is certainly the possibility, and we are evaluating our capacities as it relates to that. We feel comfortable at this point in time with the timing of when we think some of those tenders might come out, but yes, it's certainly the case that we anticipate it could be more than one.
That is certainly the possibility and we are evaluating our capacities are as it relates to that we feel comfortable at this point in time.
The timing of when we think some of those tenders might come out, but yes, it's certainly the case that.
We anticipate it could be more than one.
Speaker 9: My last question, so regarding a tender where a contract was made, I think one of the issues with you guys was you weren't comfortable with the risks associated with that particular contract and decided not to play. Are we feeling more comfortable about how we can address some of the issues that may be going forward, like the one that was outstanding?
My last question so regarding a tender.
We're a contract.
It was made.
I think one of the issues with you guys was you weren't comfortable with the risks associated with that particular contract and decided not to play how are we feeling more comfortable about how we can address some of the issues that maybe going forward like the one that was outstanding.
<unk>.
Speaker 3: I think so. I think that, really, there's sort of movement on both sides of that equation. There's, I think, better comprehension of what we were presenting as unacceptable risks there. And then, I think, on top of that, we've sort of evaluated some other business approaches to how we might accommodate that.
I think so I think that really there is there sort of movement on both sides of that equation. There is I think better comprehension of what.
What we were presenting us as unacceptable risks there and then I think on top of that.
We've sort of evaluated some other business approaches to how we might accommodate that.
Speaker 9: I'm sorry, I do have one more. So in the event that there was a contract.
I'm, sorry, I do have one more so in the event that there was a contract.
Speaker 3: which is, let's call it up to 2025, would we have the current capacity to handle it? I believe so, yes.
Which is let's call it out to 2025.
Would we have the current capacity too.
Handle it.
I believe so yes.
Thanks, guys.
Thank you bet Scott.
And we have our next question from Donald Collins with Ironwood.
Speaker 3: The past few years have been challenging ones for you as the oil and gas industry experienced a downturn.
The past few years have been challenging ones for you as the oil and gas industry experienced the downturn.
Speaker 3: But you persevered, preserved capital, invested in new technologies. Now that the markets have recovered, you're seeing some good profitable results. So, congratulations are due to you and the entire GEOS team. Thank you very much.
But you persevered preserve capital invested in new technologies.
Now that the markets have recovered youre seeing some good profitable results.
Congratulations are due to you and the entire Geos team.
Thank you very much.
And our next question comes from Michael Melby with Gate City capital.
Yeah.
Hey, gentlemen, congrats on the Goodyear and the good quarter could you comment do you plan on being free cash flow positive in fiscal 2024.
Speaker 3: Gentlemen, yeah, congrats on the good year in the good quarter. Could you comment? Do you plan on being free cash flow positive in fiscal 2024?
Yes.
Speaker 3: And maybe you could expand a little bit, if that's the case, on what you'd need to see to return capital to shareholders. Looks like you have excess cash now and plan on generating more this year.
And then maybe you could expand a little bit of that the case.
On what you'd need to see to return capital to shareholders. It looks like you have excess cash now and plan on generating more this year.
Well, we just mentioned there may be some PRN tenders coming out so we want to make sure that we have operational wherewithal to accommodate any of these sorts of things that come up plus there are some other aspects within our.
Speaker 3: Well, we just mentioned there may be some PRM tenders coming out, so we want to make sure that we have operational wherewithal to accommodate any of these sorts of things that come up.
Speaker 3: Plus, there are some other aspects within our marine ocean bottom node business that could manifest. They will naturally require some commitment on the part of the potential customers.
Marine Ocean bottom node business that could manifest it they will naturally require some commitment on the part of the potential customers, but those will require some additional effort in the way of cash as well. So it's really a business evaluation. So I can't give you an equation that tells you when that will occur and there might be a stop by.
Speaker 3: But those will require some additional effort in the way of cash as well. So it's really a business evaluation. So I can't give you an equation that tells you when that will occur, and there might be a stock buyback.
Back.
Yeah.
Okay.
Yes, it feels like.
With the cash balance that it should be sufficient.
Speaker 3: With the cash balance that it should be sufficient, I think going forward if it provides more color in terms of what criteria you need to do that, it would be helpful.
Second I think going forward, if you could provide some more color in terms of what what criteria do you need to do that it would be be helpful. So we understand kind of.
Speaker 3: trade-offs between investing in the business, or potentially, and returning cash that you've generated to shareholders.
The tradeoffs between investing in the business or potentially and returning cash that you've generated to shareholders.
Speaker 3: Just more of a comment than a question, but yeah, going forward, do you expect Aquana in fiscal 2024 to generate a meaningful amount of revenues for the company? We think so.
That's more of a comment than a question, but yes going forward do you expect that quanta in fiscal 2024 to generate a meaningful amount of revenues for the company.
We think so we absolutely think so.
Got it and any thought on timing if that kind of in the next quarter.
Speaker 3: Got it. And any thought on timing if that's kind of the next quarter or in general when we could expect to see a contribution?
In general when when we can expect to see a contribution from that.
Speaker 3: I don't think it's going to be late in the year. I don't know if it will be in the first quarter as far as when we see some of that some of those initial first fruits, but I think it will come relatively soon. Thanks for your help. Best of luck. You bet.
I don't think its going to be late in the year I don't know if it'll be in the first quarter as far as when we see some of that some of those initial first fruits.
But I think it will it will come relatively soon.
Thanks for your help.
You bet. Thank you.
And we have a follow up from Bill <unk> with Titan capital.
Thank you I actually wanted to pick up on the.
Speaker 7: Thank you. I actually want to pick up on the. A quanta question 1st of all.
Quanta question first of all.
Speaker 7: You did, in the industrial products revenue, a total of $37 million of revenue, and I just want to use the language that was just used, a significant increase in revenue. Is that what you're referring to? Relative to the $37 million, you would expect a significant increase in that revenue?
You did in the industrial products revenue, a total of $33 7 million of revenue.
And and.
Just wanted to use the language that was just used it as a significant increase in revenue is that what you're referring to is relative to the $37 million you would expect a significant increase in that revenue.
Speaker 3: I'm not going to compare it to that because there's such a mixture of products that went into that number bill. The industrial products certainly were the driver. Aquana was very little of any contribution to that. It wasn't zero, but it wasn't what you would call meaningful and significant.
I'm not going to compare to that because theres such a mixture of products that went into that number bill the industrial products, certainly where the driver.
Quanta was very little of any contribution to that it wasn't zero, but it wasn't a what you would call meaningful and significant.
Speaker 3: But there's a mixture of products that went into the overall adjacent markets that pushed it up to be the 25% growth that it was but we do a quantum will be notable in our estimation of what we see in this coming
But there's a mixture of products it went into the overall adjacent markets that pushed it up to the 25% growth that it was but we do have quantum will be notable in our estimation of what we see in this coming year.
Speaker 7: All right. Thank you. And then a follow-up relative to reservoir monitoring. I think this is the first time in many, many years that we have heard that there may be multiple tenders or more than one tender within a year. Would you talk to what you think may be changing within the market space, or if it's just pure random coincidence that there are a couple that might be coming at the same time?
Alright, Thank you and then a follow up relative to.
To reservoir monitoring I think this is the first time in many many years that we have heard that there may be multiple tenders or more than one tender within a year.
Would you talk to what you think may be changing within the market space.
Or if it's just pure random coincidence that there are a couple that might be coming at the same time.
Speaker 3: I don't think it's random. I think that there's comprehension within the oil companies that despite some of the
I don't think its random I think that.
Theres comprehension.
Within the oil companies that are.
Despite some of the the.
Speaker 3: the ill words shoved in their direction that oil and gas, when properly managed, is going to be a viable energy source and a required energy source for decades to come as any sort of energy transition begins to manifest.
Ill words shoved in their direction that oil and gas when properly managed is going to be.
<unk> energy source in our required energy source for it.
Decades to come as any sort of energy transition begins to manifest so that being said I think that some of the fields that they have discovered they know they can better manage our.
Speaker 3: So that being said, I think that some of the fields that they have discovered, they know they can better manage with lower carbon footprints if they have a complete assessment of how those reservoirs are changing as they exploit them. So I think largely that just the mindset of the stability of what the market is going to be has made that more tractable for them.
With lower carbon footprints, if they have a complete assessment of how those reservoirs are changing as they exploit them. So I think largely that.
Just the mindset of the stability of what the market is going to be has made that more tractable for them to consider.
Speaker 7: Thanks Rick. And then finally, this may be.
Thanks, Rick and then finally.
This may be.
Speaker 7: A silly question, or it may be insightful for us, but your contract manufacturing revenues were down. Was that because you intentionally reduced that business because you needed space for higher value activities, or was that just simply a function of your customers having lower revenue?
Silly question or it may be insightful forest, but your contract manufacturing revenues were down.
Was that because you not intentionally reduce that business because you needed space for higher value activities or was that just simply a function of your.
Customers, having lower revenue.
I think that it's a timing issue.
Speaker 3: I think that it's a timing issue, some of you know, there's, there's been supply chain issues and inflation issues that have affected our customers in many respects. And so that has been an impact. There has been a certain amount of capacity issue in a few of our areas and manufacturing. We're working on that, by the way. So it does, in fact, have some components of it that are related to exactly what you refer to there.
There is there has been supply chain issues and inflation issues that have affected our customers in many respects and so that has been an impact there has been a certain amount of <unk>.
Capacity issue in a few of our areas in manufacturing, we're working on that by the way. So it does in fact.
Have some components of it that are related to exactly what you referred to there.
Speaker 3: But I think that going forward, we're going to have mitigated most of those circumstances.
But I think that going forward, we're going to have mitigated most of those circumstances.
Speaker 7: So, it would be fair to say that you are minimizing the contract manufacturing activities in some cases because you need the capacity for the base business.
So it would be.
Fair to say that you are you are minimizing the contract manufacturing activities.
In some cases, because you need the you need the capacity for the base business.
Speaker 3: Only in a strategic way, because those customers that we service in our contract manufacturing were important to us as well. So we don't freeze them out as far as that goes, but there are definitely some capacity issues and constraints that sometimes get in the way, but we address.
Only in a strategic way because those customers that we service in our contract manufacturing were important to us as well. So we don't freeze them out as far as that goes but there are definitely some capacity issues and constraints that sometimes get in the way, but we address.
And Rick I don't think.
Speaker 7: And Rick, I don't think I've ever asked, but do are those customers tending to be in the oil and gas arena and so that their revenues will move up the same time that you're
Ever asked that.
Are those customers tending to be in.
In the oil and gas arena, and so that their revenues will move up the same time.
Is that your.
Speaker 7: that your energy revenues will move up, or do they tend to be in completely unrelated industrial businesses?
That your energy revenues will move up.
Or do they tend to be and completely unrelated.
Industrial businesses.
Speaker 3: They tend to be completely unrelated. That's circumstantial. We're more than happy to do contract work for anyone in the oil and gas industry, and there are some. But just to be forthcoming, I think that the primary customer base that flows through our contract manufacturing paths is not oil and gas related.
They tend to be completely unrelated that circumstantial, we're more than happy to do contract work for anyone in the oil and gas industry and there are some.
But just.
To be forthcoming I think that the primary customer base that flows through our contract manufacturing.
<unk> is not oil and gas related.
Speaker 3: Great, thank you for taking another round of questions. You bet, Bill.
Great. Thank you for taking another round of questions.
You bet Bill.
Yeah.
And we have another follow up from Scott Bundy with Moors <unk> Cabot.
Speaker 9: Hey guys, is the AVS valve beyond pilot programs and that's why ITRON was interested in what
Hey, guys is the avs valve beyond pilot programs and that's why <unk> was interested.
And what you guys are doing.
Speaker 3: I don't think there's a causal relationship there, Scott, although one might try to draw one. It is commercially available and it is still in pilot programs with other municipalities as far as that goes. So those kind of act independently. I think ITRON sees the value of that product in some of the contracts that they're going after and want to serve.
I don't think I don't think there is a causal relationship there Scott, although one might try to draw one.
It is commercially available and it is still in pilot programs with other municipalities as far as that goes so those kind of act independently I think.
I try and sees the value of of that product and some of the contracts that they're going after and we want to service.
Speaker 9: And so far, the programs that are out there using this valve have done everything that you guys wanted? Or have there been any setbacks? And the last question on that is, there have been a component problem in the past for this product. Are there any component problems?
And so far the programs that are out there using this valve have done everything that.
You guys wanted or have there been any setbacks and last question on that is there have been a component problem in the past for this product are there any component problems.
Speaker 3: There are not at this point in time. I mean, we've solved that problem by redesigning some of those impossible-to-get components out. So now the technology just falls into the standard issue of ensuring things work and refining any manufacturing processes and that sort.
There are not at this point in time I mean, we've we solve that problem by redesigning some of those are impossible to get components out.
So.
Now the technology, just falls into the standard issue of ensuring things work in refining.
Any manufacturing processes and that sort of thing.
Speaker 10: So we're really just seeing small amounts of the AVS valve in the marketplace, pilot programs, is that correct? So to date, that is exactly true. Great, got it. Thank you.
So we're really just seeing small amounts of the avs valve in the marketplace call. It pilot programs is that correct.
To date that is exactly true.
Great got it thank you.
And at this time I'm currently showing no further questions in the queue I will turn the call back over to Rick Wheeler for any additional closing remarks alright.
Alright, well thank you Michael.
Speaker 3: And thanks to everybody for listening to the call today and all the great questions you guys have asked. Hopefully, we've given you some good answers. At this point, we look forward to speaking with you again on our conference call for the first quarter of fiscal year 2024, which will occur in February . So, thanks again.
And thanks to everybody for listening to the call today and all the great questions. You guys have asked hopefully we've given you some some good answers.
At this point, we look forward to speaking with you again on our conference call for the first quarter of fiscal year, 2024, which will occur in February so thanks, again and goodbye.
Yes.
Speaker 2: Thank you. This does conclude today's Geospace Technology's fourth quarter and full year 2023 earnings conference call. Please disconnect your line at this time and have a
Thank you. This does conclude today's geo space technologies fourth quarter and full year 2023 earnings conference call. Please disconnect. Your lines at this time and have a wonderful day.
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