Q4 2024 Geospace Technologies Corp Earnings Call

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Operator: Welcome to the Geospace Technologies fourth quarter and fiscal year 2024 earnings conference call.

Speaker Change: Welcome to the Geo space technologies fourth quarter and fiscal year 'twenty 'twenty four earnings conference call.

Operator: Hosting the call today from Geospace is Mr. Rich Kelley, President and Chief Executive Officer. He is joined by Mr. Robert Curda, the company's Chief Financial Officer.

Speaker Change: Hosting the call today from G O space, It's Mr. Rich Kelly, President and Chief Executive Officer. He is joined by Mr. Robert Kurt <unk>, the company's Chief Financial Officer.

Operator: Today's call is being recorded and will be available on the Geospace Technologies Investor Relations website following this 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. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, press star zero.

Speaker Change: Today's call is being recorded and will be available on the geospatial technologies Investor Relations website. Following this call.

Speaker Change: 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.

Speaker Change: If you would like to ask a question at that time. Please press star one on your telephone keypad.

Speaker Change: If at any point. Your question has been answered you may remove yourself from the queue by pressing star two we ask that you. Please pick up your handset to allow optimal sound quality.

Speaker Change: Lastly, if you should require operator assistance press star zero.

Operator: It is now my pleasure to turn the floor over to Rich Kelley. Sir, you may begin.

Speaker Change: It is now my pleasure to turn the floor over to rich Kelly, Sir you may begin.

Rich Kelley: Good morning and welcome to Geospace Technologies conference call for the fourth quarter of fiscal year 2024. I am Rich Kelley, the company's President and Chief Executive Officer, and I am joined by Robert Curda, the company's Chief Financial Officer. In our prepared remarks, I will first provide an overview of the fourth quarter, and Robert will then follow up with more in-depth commentary on our financial performance.

Rich Kelly: Good morning, and welcome to the Geo Space Technologies Conference call for the fourth quarter of fiscal year 2024.

Rich Kelly: I am rich Kelly, the company's President and Chief Executive Officer, and I'm joined by Robert <unk>, The company's Chief Financial Officer.

In our prepared remarks, I will first provide an overview of the fourth quarter and Robert will then follow up with more in depth commentary on our financial performance.

Rich Kelley: I will then give some final comments before opening the line for questions. Today's commentary on markets, revenue, planned operations, and capital expenditures may be considered forward-looking, as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on what we know now, but actual outcomes are affected by uncertainties beyond our control or prediction. 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.

Rich Kelly: I will then give some final comments before opening the line for questions.

Rich Kelly: Today's commentary on markets revenue planned operations and capital expenditures may be considered forward looking as defined by the private Securities Litigation Reform Act of 1995.

Rich Kelly: These statements are based on what we know now but actual outcomes are affected by uncertainties beyond our control or prediction.

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

Rich Kelly: Some of these risks and uncertainties are discussed in our SEC Form 10-K, and 10-Q filings.

Rich Kelley: For convenience, we will link a recording of this call on the Investor Relations page of our geospace.com website, which I invite everyone to browse through and learn more about Geospace, our subsidiaries, and our products and solutions. Note that today's recorded information is time sensitive and may not be accurate at the time of one listens to the replay.

Rich Kelly: Convenience, we will link a recording of this call on the Investor Relations page of our geospatial Dot Com website.

Rich Kelly: Which I invite everyone to browse through and learn more about G O space, our subsidiaries and our products and solutions.

Rich Kelly: Note that todays recorded information is time sensitive and may not be accurate at the time, but one listens to the replay.

Rich Kelley: Yesterday, after the market closed, we released our financial results for the fourth quarter and full year fiscal year 2024, which ended September 30, 2024. We close the year with $135.6 million in revenue. This represents the greatest revenue figure in 10 years. However, due to non-cash charges in the fourth quarter totaling $17.3 million, the year ended with a net loss of $6.5 million. These one-time charges are primarily associated with a divestiture of our Russian entity. But excluding these non-cash charges, the fiscal year adjusted net income is $10.7 million. While examining the increasing conflict in Ukraine and potential conflicts, complications within Russian-sanctioned entities, management and our board of directors determined the most prudent action would be to divest of our Russian entity.

Rich Kelly: Yesterday after the market closed.

Rich Kelly: We released our financial results for the fourth quarter and full year fiscal year 'twenty 'twenty, four which ended September 30th 2024.

Rich Kelly: We closed the year with $135 $6 million in revenue.

Rich Kelly: This represents the greatest revenue figure in 10 years.

Rich Kelly: However, due to noncash charges in the fourth quarter totaling $17 $3 million a year ended with a net loss of $6 $5 million.

Rich Kelly: These onetime charges are primarily associated with the divestiture of our Russian entity.

Rich Kelly: Excluding these noncash charges the fiscal year adjusted net income is $10 $7 million.

While examining the increasing conflict in Ukraine and potential conflicts.

Rich Kelly: Locations within Russian sanction entities management, and our board of directors determined the most prudent action would be to divest of our Russian entity.

Rich Kelley: This divestment resulted in a loss driven mainly by accrued foreign exchange losses which had minimal effect on the value of the net assets of the company. Additionally, our fiscal year financial reporting reflects another one-time charge related to a non-cash intangible asset impairment related to our subsidiary, Quantum Technology Sciences. Following our long-standing and unwavering commitment toward sustaining a strong balance sheet, we finished the year with zero debt and holdings of $37.1 million in cash and short-term investments. While the financials indicate a net loss for the year due to two non-cash charges, we are pleased to have 24 months of consecutive adjusted net income, indicating our core business remains profitable.

Rich Kelly: This divestment resulted in a loss driven mainly by accrued foreign exchange losses, which had minimal effect on the value of the net assets of the company.

Rich Kelly: Additionally, our fiscal year financial reporting reflects another one time charge related to a noncash intangible asset impairment related to our subsidiary quantum technology Sciences.

Rich Kelly: Following our long standing and unwavering commitment towards sustaining a strong balance sheet. We finished the year with zero debt and holdings of $37 $1 million in cash and short term incentives investment excuse me.

Rich Kelly: Well the financials indicate a net loss for the year due to two noncash charges. We are pleased to have 24 months of consecutive adjusted net income, indicating our core business remains profitable.

Rich Kelly: Yeah.

Rich Kelley: We started the fourth quarter of fiscal year 2024 with significant contributions from our oil and gas market segment with more than $20 million in sales and rental announcements for our OBX seabed nodes in August. This follows a trend for the fiscal year of multi-million dollar contracts for this product line and contributed to an overall increase in revenue from the prior fiscal year. In our Adjusted Markets segment, we enjoyed a record-setting year for our Hydrocon line of smart water meter cables and our Aquanaut product line. The market continues to recognize our leading technology and resulting growth outpaces the industry.

Rich Kelly: We started the fourth quarter of fiscal year, 'twenty 'twenty four with significant contributions from our oil and gas market segment with more than $20 million in sales and rental announcements for our obs seabed knows in August.

Rich Kelly: This follows a trend for the fiscal year multimillion dollar contracts for this product line and contributed to an overall increase in revenue from the prior fiscal year.

Rich Kelly: And our adjusted market segment, we enjoyed a record setting year for our hydrocarbon line of smart water meter cables in our corner product line.

Rich Kelly: The market continues to recognize our leading technology and resulting growth outpaces the industry.

Rich Kelley: We also had our first successful international sale of our Aquana products. The Aquana product line generates further traction in smart water markets for both municipal and multifamily residential applications. We believe that our focus on smart water going forward will continue to drive growth for the organization.

Rich Kelly: We also had our first success successful international sale of our quantum products.

Rich Kelly: The quantum product line generates further traction and smartwater markets for both municipal and multifamily residential applications.

We believe that our focus on Smartwater going forward, we will continue to drive growth for the organization.

Robert Curda: I now turn the call over to Robert to provide more financial detail on our fourth quarter and full year performance. Thanks, Rick, Rich, and good morning.

Speaker Change: I'll now turn the call over to Robert to provide more financial detail on our fourth quarter and full year performance.

Robert Kurt: Thanks, Rick Rich and good morning, before I begin I'd like to remind everyone that we will not provide any specific revenue or earnings call.

Robert Curda: Before I begin, I'd like to remind everyone that we will not provide any specific revenue or earnings call or earnings guidance during our call. In yesterday's press release for our fourth quarter ended September 30, 2024, we reported revenue at $35.4 million compared to last year's revenue of $29.3 million. The net loss for the quarter was $12.9 million or $1 per diluted share compared to last year's net income of $4.4 million or $0.33 per diluted share. For the 12 months ended September 30th, 2024, we reported revenue of $135.6 million compared to revenue of $124.5 million last year.

Earnings guidance during our call.

Robert Kurt: In yesterday's press release for our fourth quarter ended September 30th 2024, we reported revenue of $35 4 million compared to last year's revenue of 29.3 million.

Robert Kurt: The net loss for the quarter was $12 9 million or a dollar per diluted share compared to last year's net income of $4 4 million or 33 cents per diluted share.

Robert Kurt: For the 12 months ended September 32024, we reported revenue of $135 6 million compared to revenue of $124 5 million last year.

Robert Curda: Our net loss for the 12-month period was $6.6 million, or $0.50 per diluted share, compared to last year's net income of $12.2 million, or $0.92 per diluted share.

Our net loss for the 12 month period was $6 6 million or 50 cents per diluted share compared to last year's net income of $12 2 million or <unk> 92 per diluted share.

Robert Curda: In the fourth quarter ended September 30th, 2024, we recorded non-cash charges totaling $17.3 million. To add additional detail to Rich's prior comments on this subject, $14.5 million was from the divestiture of our Russian legal entity, while another was a $2.8 million charge from the impairment of tangible assets from our Quantum Technology Sciences subsidiary. It's important to note that the divestiture of the Russian legal entity has virtually no effect on the company's net assets, as most of the charge came from cumulative unrealized foreign currency translation losses previously recorded within shareholders' equity. The oil and gas segment produced revenue of $17.5 million for the three months ended September 30, 2024.

In the fourth quarter ended September 32024, we recorded noncash charges totaling $17 3 million.

Robert Kurt: To add additional detail to rich Rich's prior comments on this subject $14 5 million was from the divestiture of our Russian legal entity, while another was a $2 8 million charge from the impairment of intangible assets from our quantum technology Sciences subsidiary.

Robert Kurt: It's important to note that the divestiture of the Russian legal entity has virtually no effect on the company's net assets as most of the charge came from cumulative unrealized foreign currency translation losses previously recorded within shareholders' equity.

Robert Kurt: The oil and gas segment produced revenue of $17 5 million for the three months ended September 32024. This compares with revenue of $17 8 million for the same period of the prior fiscal year.

Robert Curda: This compares with revenue of $17.8 million for the same period of the prior fiscal year. For the 12-month period, the segment contributed revenue of $77.5 million versus $74 million for the same prior year period. The 12-month increase in revenue is due to increased sales of ocean-bottom nodal products, such as the Mariner, and sales of OBX equipment from our rental fleet. This was offset by lower utilization of our rental fleet and lower demand for seismic sensors and marine products.

Robert Kurt: For the 12 month period. The second contributor contributed revenue of $77 5 million versus 74 million for the same prior year period.

Robert Kurt: The 12 month increase in revenue is due to increased sales of ocean bottom nodal products, such as the Mariner and sales so that would be ex equipment from our rental fleet.

This was offset by lower utilization of our rental fleet and lower demand for seismic sensors and marine products.

Robert Curda: Now our adjacent market segment revenue, which includes our industrial products and imaging products. Our industrial product revenue for the fourth quarter of fiscal year 2024 was $14.6 million compared to $7.6 million for the fourth quarter of 2023, an increase of 91 percent. Industrial products' 12-month revenue for fiscal year 2024 is $43 million, an increase over the same period in 2023 of 17 percent. Both periods increases are the result of record high revenue from our Hydrocon water meter cables and connector product line. Imaging product revenue for the fourth quarter was $3 million, which is equal to last year's revenue for the same period.

Robert Kurt: Now our adjacent market segment revenue, which includes our industrial products and imaging products.

Robert Kurt: Our industrial product revenue for the fourth quarter of fiscal year, 2024 was $14 6 million compared to $7 6 million for the fourth quarter of 2023, an increase of 91%.

Industrial products 12 month revenue for fiscal year, 'twenty 2024 is $43 million an increase over the same period in 2023 of 17%.

Robert Kurt: Both have both periods increases are the result of record high revenue from our hydrocarbon and water meter cables, Inc. Connector product line.

Robert Kurt: Imaging product revenue for the fourth quarter was $3 million, which is equal to last year's revenue for the same period. The 12 month revenue for imaging products for fiscal year, 2024 is $12 6 million versus $12.

Robert Curda: The 12-month revenue for imaging products for fiscal year 2024 is $12.6 million versus $12.2 million for the same period in 2023.

Robert Kurt: $2 million for the same period in 2023.

Robert Curda: Finally, revenue from our emerging market segment for the fourth quarter was $200,000 compared to $800,000 for the same period in 2023. The 12-month revenue for the segment for fiscal year 2024 was $2.2 million compared to $1.2 million for the same prior year period.

Robert Kurt: Finally revenue from our emerging market segment for the fourth quarter was 200000 compared to 800000 for the same period in 2023.

Robert Kurt: 12 month revenue for this segment for fiscal year, 2024 was $2 2 million compared to $1 2 million for the same prior year period.

Robert Curda: Our 12-month cash investments into the rental fleet was $8.3 million, and cash investments into our property plant equipment was $3.9 million. As of September 30, 2024, we have $37 million of cash in short-term investments and $15 million of additional available liquidity from our credit facility. In addition, we own numerous real estate holdings in Houston and around the world that are owned free and clear without any leverage.

Robert Kurt: Our 12 months cash investments into the rental fleet was $8 3 million in cash investments into our property plant and equipment was $3 9 million.

Robert Kurt: As of September 32024, we have $37 million of cash and short term investments and $15 million of additional available liquidity from our credit facility.

Robert Kurt: In addition, we own numerous real estate holdings in Houston and around the world that are owned.

Owned free and clear without any leverage this.

Robert Curda: This concludes my discussion.

Speaker Change: This concludes my discussion I would like to wish everyone, a happy Thanksgiving and now return to the call to rich for his closing comments.

Rich Kelley: I would like to wish everyone a happy Thanksgiving and now return the call to Rich for his closing comment.

Rich Kelley: Thank you, Robert. As we announced in September, this will be the last time we will be reporting earnings with these business segments of oil and gas markets, adjacent markets, and emerging markets. Beginning with our release in early February, we will provide financial information using our three new business segments.

Rich Kelly: Thank you Robert.

Rich Kelly: As we announced in September this will be the last time, we will be reporting earnings with these business segments of oil and gas markets adjacent markets and emerging markets.

Rich Kelly: With their release in early February we will provide financial information using our three new business segments, Smartwater energy solutions and intelligent industrial.

Rich Kelley: Smart Water, Energy Solutions, and Intelligent Industrial. Other highlights of note this year included our company's addition to the Russell Stock Index. the RUSLE 2000, RUSLE 3000, and RUSLE MicroCap Index.

Rich Kelly: Other highlights of note. This year included our company's addition to the Russell stock indexes, the Russell 2000, and Russell 3000, and Russell Microcap Index.

Rich Kelley: In a final note, we would like to thank Rick Wheeler, our outgoing CEO. Rick dedicated almost 30 years to geospace. He led the company through successful and tumultuous times in the industry. His guidance and foresight provided stability and opportunities for growth through diversification. His management and leadership allowed geospace to remain a strong presence in the seismic equipment market while taking advantage of their engineering and manufacturing capabilities to explore new opportunities and adjacent markets.

Rich Kelly: And a final note we would like to thank Rick Wheeler, our outgoing CEO.

Speaker Change: Rick dedicated almost 30 years to G O space.

Speaker Change: He led the company through successful and too much tumultuous times in the industry.

Speaker Change: His guidance and foresight provided stability and opportunities for growth through diversification.

Speaker Change: His management and leadership allowed Geo space to remain a strong presence in the seismic equipment market, while taking advantage of their engineering and manufacturing capabilities to explore new opportunities in adjacent markets.

Rich Kelley: Rick will remain as a member of the Board of Directors, and we wish him all the best in his retirement.

Speaker Change: Rick will remain as a member of the board of directors and we wish him all the best in his retirement.

Operator: This concludes our prepared commentary, and I will now turn the call back to the moderator for any questions for our listeners. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star and 1 to ask a question. We will pause for a moment to allow questions to queue.

Speaker Change: This concludes our prepared commentary and I will now turn the call back to the moderator for any questions for our listeners.

At this time, if he would like to ask a question. Please press the star and one on your telephone keypad.

Speaker Change: You may remove yourself from the queue at any time by pressing star two.

Once again that is star one to ask a question, we will pause for a moment to allow questions to queue.

Martin Lorenzen: And we'll take our first question from Martin Lorenzen with Private Investor. Hello, Texas.

And we'll take our first question from Martin Lorenzen with private Investor.

Speaker Change: Hello, Texas.

Rich Kelley: Hello, Martin. I'll start with what should be the primary focus of every public company, which is capital allocation. Given your strong balance sheet, what's your time frame to increase the buyback program? At this time, we don't have any intention in the short term of doing any more stock buybacks. Got it. And, uh...

Speaker Change: Hello Martin.

Speaker Change: I'll start with what should be the primary focus of every public company, which is capital allocation given your strong balance sheet, what's your timeframe to increase the buyback program.

Speaker Change: At this time, we are we don't have any intention in the short term or doing any more stock buybacks.

Speaker Change: Got it and.

Rich Kelley: On the energy segment, several public companies note an uptick in exploration, particularly land exploration. Now, I guess it has to do with administrative changes that are about to be done. When do you expect to capitalize on that? I know you had a product launch but no sales yet. Yeah, I would say that while there's maybe excitement in the industry, we've not actually seen that translated into actual orders for equipment or rental contracts for equipment. We're well positioned for that with the launch of our Pioneer product, which is now in manufacturing, and with our OBN products with Mariner and Mariner Deep.

Speaker Change: On the energy segment several public companies note an uptick in exploration.

Speaker Change: Particularly Atlanta explanation now I guess it has to do with administrative changes that.

Speaker Change: The balance will be done.

Speaker Change: And when do you expect to capitalize on that I know you.

Speaker Change: Had a had a product launch.

Speaker Change: No sounds yes.

Yeah.

Speaker Change: Yeah.

Speaker Change: I would say that while there's maybe excitement in the industry, we have not actually seen that translated into actual orders for equipment or a rental contracts for equipment, we're well positioned for that.

Speaker Change: With the launch of our pioneer product to which entity, which is now in manufacturing and with our OBL product with Mariner Mariner deep, so we're well well suited and.

Rich Kelley: So, we're well suited and we'll welcome any orders that come in the door, but as it stands right now, we are not seeing the excitement translating into orders for our equipment or services. Got it.

Speaker Change: We will welcome any orders that come in the door, but as it stands right now we are not seeing the excitement translating into orders for our equipment or services.

Rich Kelley: And now that the Russian segment is gone, What's the cost savings associated with that? I, you know, the Russian entity was pretty much self-sustaining, they generated enough cash flow to support themselves. In the end, the cost from them was very insignificant to us as a whole.

Speaker Change: Got it and now that the Russian segment has gone.

Speaker Change: What's the cost savings associated with that.

Speaker Change: You know the Russian entity was pretty much self sustaining they they generated enough cash flow to support themselves.

Speaker Change: In the end the cost from them was very insignificant to us as a whole.

Rich Kelley: And on the OBX rental fleet, could you update us on how many nodes you currently own? We don't normally give that information. And would it be fair to say that you currently utilize your fleet at around 40%? We also don't provide that information. Sorry, Martin.

Speaker Change: And on the Ob ex rental fleets.

Speaker Change: Could you update us on how many nodes you currently own.

Speaker Change: We don't normally give that information.

Speaker Change: And would it be fair to say that Youre currently utilized you'll fleet that's at around 40%.

Martin: We also don't provide that information sorry Martin.

Yeah.

Martin: And.

Rich Kelley: On the carbon capture, that sector seems to be already industrially scaled. I think the U.S. Department of Energy just approved a $2.4 billion commitment to apply CCUS to an Indiana coal mine. I think just recently, just yesterday, BP green-lighted the $7 billion. Indonesian Greenfield Gas Project that also includes Carbon Capture and Storage. Do you expect to be involved there given your ongoing relationship with BP? I mean, we've had ongoing conversations with several different contractors, several different entities, but as it stands right now, we don't have anything specific to report or comment on. and it's the.

On the carbon capture that sector seems to be already industrially scaled.

Martin: I think the U S Department of energy just approved a $2 12 billion commitment to imply CCU estrogen, Indiana coal mine.

Martin: I think just recently just yesterday BP green lighted the $7 billion in.

Martin: Denise in Green field gas project that also includes <unk>.

Speaker Change: Carbon capture and storage do you expect to be involved there given the ongoing relationship with BP.

Speaker Change: Hum.

Speaker Change: I mean, we've had ongoing conversations with several different contractors several different entities.

Speaker Change: The entities, but as it stands right now we don't have anything specific to report our comment on.

Speaker Change: And as the.

Rich Kelley: Margin profile within the carbon capture and storage application. comparable to the reservoir monitoring business. It's hard to say. I mean, there's not enough historical business there to say if that's really if you can really do a comparison between the two.

Speaker Change: Margin profile within the carbon capture and storage applications.

Speaker Change: Comparable to the reservoir monitoring business.

Speaker Change: Okay.

Speaker Change:

It's hard to say I mean, theres not enough.

Speaker Change: Historical business there to say if that's really if you could really do it a comparison between the two.

Rich Kelley: And on anything water related, could you give us a rough sense of how many customers you currently serve? On the Hydrocon water meter connector, we have within our customer base, the majority of the major water meter manufacturer OEMs that we do business with. And on the Aquanaut side, you know, as you know, that product just launched this year, but we are in communications with a number of the suppliers in that industry, or customers in the industry, I should say.

Speaker Change: And on anything water related could you give us a rough sense of how many customers do you currently serve.

Speaker Change: On the hydrocarbon water meter connector, we have within our customer base. The majority of the major water meter manufacturer Oems that we do business with and on the Qantas side.

Speaker Change: As you know that product just launched this year, but we are in communications with a number of the.

Speaker Change: Suppliers in that industry, our customers and industry I should say.

Speaker Change: Okay.

Rich Kelley: Okay, and on the expense side, anything tangible you're working on currently? Nothing of note.

Speaker Change: Okay and on.

Speaker Change: On the expense side anything tangible you working on currently.

Speaker Change: Yeah.

Speaker Change: Nothing of note.

Speaker Change: Yeah.

Martin Lorenzen: Thanks and good luck. Thank you, Martin. Thank you.

Speaker Change: Thanks, and good luck.

Speaker Change: Thank you Martin Thank you.

Speaker Change: Thank you and once again to ask a question. Please press star one.

Operator: And once again, to ask a question, please press star one.

Jeffrey Feldman: We'll take our next question from Jeffrey Feldman with Primary Succession Capital. Your line is open. Hi, gentlemen, and thanks for taking the call.

Speaker Change: We'll take our next question from Jeffrey Feldman with primary succession capital. Your line is open.

Speaker Change: Hi, gentlemen, and thanks for taking my call.

Rich Kelley: Q&A Q&A Q&A Good luck with that and I'm looking forward to the future here. My question was really simple. It had to do with the changes with the Russian...

Speaker Change: Another question.

Speaker Change: Actually a reasonably good outcome in quarter so.

Speaker Change: So good luck with that and I'm looking forward to the future here, but my question was really simple had to do with the the changes with the Russian.

Rich Kelley: , Unknown Operating Officer, Unknown Operating Officer, Unknown Operating Officer, Unknown Sure, Jeffrey. I'll start with why the action wasn't taken sooner. The reality is that we were still able to operate in Russia for the last several years, even with the sanctions, but what's happened recently is several of the large Russian oil seismic contractors ended up on the sanctions list, which means that our Russian entity would not have been able to do business with them, but the Russian government could have forced our hand, and then we would have been in violation of the U.S. sanctions. So it was a difficult decision, but one more politically driven than anything else.

Speaker Change: The Russian facility, let's say.

Speaker Change: And I wondered why the last few years, you haven't taken that action sooner I was interested on the operating impact did you have any capability issues are.

Speaker Change: Near that you'd want to share given that you don't have access to that resource any longer.

Speaker Change: Sure Jeffrey I'll start with a Y the action wasn't taken sooner are there. The reality is is that we were still able to operate in Russia for the last several years even.

Speaker Change: Even with the sanctions, but what's happened recently is.

Speaker Change: Several of the large Russian oil contract seismic contractors.

Speaker Change: Ended up on the sanctioned list and which means that we would not a Russian entity you would not have been able to do business with them.

Speaker Change: But the Russian government could have forced the forced our hand, and then we would've been in violation of the U S sanctions.

Speaker Change: So it was a difficult decision, but one more politically driven than anything else and so we decided it was the best thing to do is just to divest ourselves of the entity.

Rich Kelley: And so we decided it was the best thing to do was just to divest ourselves of the entity. From an operations standpoint, we had already been working, knowing that that potential could happen in standing up a manufacturing facility in Malaysia with a third party contractor, as well as improving our operations here in Houston. So I think we're well suited to continue to meet the needs of the market for our equipment, even with that change in ownership. That's not to say that we cannot still have some sort of relationship through a third party going forward. Okay, so just to clarify, there's minimal operational impact from that, from that chain.

Speaker Change: From an operations standpoint, we had already been working knowing.

Speaker Change: Knowing that that potentially could happen and standing up a manufacturing facility in Malaysia with a third party contractor as well as improving our operations here in Houston. So I think we're well suited to continue to meet the needs of the market for our equipment.

Speaker Change: Even with that change in ownership.

Speaker Change: That's not to say that we cannot still.

Speaker Change: Have some sort of relationship through a third party going forward.

Speaker Change: Okay. So just to clarify there's minimal operational impact from that from that change.

Jeffrey Feldman: Very minimal impact. That's great. Thank you. You're welcome, Jeffrey. Thank you.

Speaker Change: Very minimal impact.

Speaker Change: Excellent that's great. Thank you.

Youre welcome Jeffrey Thank you.

Speaker Change: Okay.

Speaker Change: Thank you we'll take our next question from Scott Bundy with Moors <unk> Cabot Your line is open.

Scott Bundy: We'll take our next question from Scott Bundy with Moores and Cabot. Your line is open. Good morning, guys.

Speaker Change: Good morning, guys.

Rich Kelley: Just a question regarding the Russian subsidiary. We had cash over there. Is that cash retrievable or is it lost? We've retrieved some of that cash, but we're not going to be able to get all of it.

Speaker Change: Just a question regarding the.

Russian subsidiary, we had cash over there is that cash retrievable or has it lost.

Speaker Change: Yeah.

Speaker Change: We've retrieve some of that cash, but we're not going to be able to get all of it.

Speaker Change:

Rich Kelley: So Robert, with the 17 acres for sale next to the plant, what's the status of that? We're still working through that contract with the buyer, but we expect we'll see that to the end. The expected impact is early next year, Scott. So first quarter of next first calendar quarter, correct? Yes, sir. Yeah, somewhere in that time.

Speaker Change: So Robert with the 17 acres for sale next to the plant what's the status of that.

Speaker Change: We're still working through that contract or a contract with the buyer, but we expect we'll see that to the end.

Speaker Change: They extended the expected are expected impact as a early next year Scott.

Speaker Change: So first quarter first calendar quarter correct.

Speaker Change: Yes, Sir yes somewhere in that timeframe.

Rich Kelley: And there are on your report here, you've got assets for sale something in the vicinity of about 1.8 million. What is that? It's a facility we have in Columbia. that we that's been for sale for some time, correct? Yeah, it was on, it was for sale in the past and then we leased it out to someone who could use the warehouse and now we've decided to put it up for sale again. And are we reasonably optimistic of a sale within six months? We're just beginning the process. I don't see why that's going to be a problem, but this is early in that search for a buyer.

Speaker Change: And there are on your reported here you've got assets for sale something in the vicinity of about $1 8 million what is that.

Speaker Change: It's a facility we have in Colombia.

Speaker Change: That we that's been for sale for some time correct.

Speaker Change: Yes. It was it was for sale in the past and then we lose.

Speaker Change: At least it out to someone who could use the warehouse and now we've decided to put it up for sale again.

Speaker Change: Okay.

Speaker Change: And Ah, we reasonably optimistic of the sale within six months.

Speaker Change: We're just beginning the process I don't see why that's going to be a problem, but it's this is early in that.

Speaker Change: That search for a buyer.

Rich Kelley: We're still waiting on our broker to give us an opinion, what's going to happen with the Colombian market.

Speaker Change: Still waiting on our broker to give us an opinion, what what's going to happen with the Colombian market.

Rich Kelley: Okay.

Speaker Change: Okay.

Rich Kelley: And so, so, Rich, just seasonality associated with the water business to, you know, run right into the fourth quarter was really good. Aquana, are you willing to tell us how much? Unknown Speaker, The Goldbergs, Gary Owens, Unknown Interviewee, Scott Bundy, Melissa Pierce, I mean, as you know, Scott, we don't provide that kind of guidance. And so, unfortunately, I won't be able to share that. But as far as seasonality in general for the Hydrocon water meter connector, we do see a slight slowdown in the calendar fourth quarter. And we are seeing that, but we still expect to have and we do have strong backlog in that for calendar year 2025.

Rich Kelly: So rich just seasonality associated with the water.

Rich Kelly: In the water business.

Rich Kelly: Run rate in the fourth quarter was really good quanta are you willing to tell us how much.

Rich Kelly: Revenues of quanta or some percentage of revenues that quanta contributed.

Speaker Change: I mean as you know Scott, we don't provide that kind of guidance. So unfortunately won't be able to share that but as far as seasonality in general for the hydrocarbon and water meter connector.

Speaker Change: We do see a slight slowdown in the calendar fourth quarter.

Speaker Change: We are seeing that but we still expect to have and we do have strong backlog and that for calendar year 2025. So we expect them to be on track for another strong year in the water space.

Rich Kelley: So we expect them to be on track for another strong year in the water space.

Scott Bundy: And finally, Robert, I assume because you didn't put anything in the release that there were zero shares bought back in the current quarter. That's correct. Thanks, guys. Thank you, Scott.

Robert Kurt: And finally Robert.

Speaker Change: I assume because you didn't put anything in the release that there were zero shares bought back in the current quarter.

Speaker Change: That's correct.

Speaker Change: Okay. Thanks, guys.

Speaker Change: Thank you Scott.

Speaker Change: Thank you.

Operator: And it appears that we have no further questions at this time.

Speaker Change: And it appears that we have no further questions. At this time I will now turn the program back over to our presenters for any additional or closing remarks.

Rich Kelley: I will now turn the program back over to our presenters for any additional or closing remarks. Thank you, Shelby, and thanks to all of you who joined our call today. We look forward to speaking to you again on our conference call for the first quarter of fiscal year 2025 in February.

Speaker Change: Thank you Shelby and thanks to all of you who joined our call today.

Speaker Change: We look forward to speaking to you again on our conference call for the first quarter of fiscal year 2025 in February.

Rich Kelley: Goodbye and have a good day.

Speaker Change: Goodbye and have a good day.

Speaker Change: Yeah.

Operator: That concludes today's teleconference. Thank you for your participation.

Speaker Change: That concludes today's teleconference. Thank you for your participation you may now disconnect.

Operator: You may now disconnect.

Speaker Change: [music].

Unknown Executive: Our personal highlights! Obligatoria Slope Presbyopia Have a positive week!

Speaker Change: Uh-huh.

Speaker Change: [music].