Geospace Technologies Reports Fiscal Year 2015 Third Quarter Results

HOUSTON--(BUSINESS WIRE)-- Geospace Technologies (NASDAQ: GEOS) today announced a net loss of $8.6 million, or $0.66 per diluted share, on revenues of $19.8 million for its fiscal quarter ended June 30, 2015. This compares with a net income of $3.8 million, or $0.29 per diluted share, on revenues of $40.7 million for the corresponding quarter in the prior fiscal year.

For the nine months ended June 30, 2015, the company recorded revenues of $68.9 million and a net loss of $19.2 million, or $1.48 per diluted share. For the comparable period last year, the company recorded revenues of $210.6 million and a net income of $38.7 million, or $2.95 per diluted share.

Walter R. (“Rick”) Wheeler, Geospace Technologies’ President and CEO, said, “In our third fiscal quarter, we saw no relief from the continuation of depressed market conditions and declining demand for our seismic equipment products. When compared to last year, fiscal year 2015 third quarter revenues were down by $21.0 million or 52%, and in the nine months ended June 30, 2015 revenues declined by $141.8 million or 67% from the same period a year ago. These revenue declines are attributed to the pronounced decrease in demand for our seismic products seen in today’s market, coupled with having no large contracts currently underway for the manufacture of permanent reservoir monitoring (PRM) systems.”

“Traditional seismic product revenues in the third fiscal quarter were $6.3 million, a decrease of $3.6 million or 36% from last year. For the nine months ended June 30, 2015, revenues for this segment were $23.6 million, a reduction of $19.7 million or 45% over the same prior year period. The reductions in both periods are a direct reflection of the very low industry activity in the current seismic exploration market. In addition, the difference in revenue year-over-year for the nine month period is accentuated by uncommonly large geophone orders in last year’s first quarter.”

“Revenues for wireless products in the third quarter were $6.0 million, a decrease of $6.2 million or 51% from the third quarter of last year. For the nine months ended June 30, 2015, our wireless product revenues totaled $23.8 million, a decrease of $46.5 million or 66% compared to the same period last year. These declines are again a direct result of reduced demand for seismic equipment in today’s market. We note, however, that in contrast to the declining overall seismic market, utilization of our OBX marine nodal systems continued to increase in the third quarter. We deployed over 3,700 OBX stations from our rental fleet to various customers on different projects throughout the quarter. Rental revenues have sequentially increased in our second and third quarters of this fiscal year, mostly from increasing rentals of the OBX marine nodal system. While we remain encouraged about the future of our OBX product line, project delays and job cancellations reported by our customers demonstrate that risk and volatility still remain even in this specialized ocean bottom seismic market.”

“Reservoir product revenues for the third quarter totaled $1.2 million, a decrease of $12.1 million or 91% compared to last year’s third quarter. For the nine months ended June 30, 2015, reservoir product revenues were $4.5 million, a reduction of $76.2 million or 94% compared to the same period of last year. Although lower demand for our borehole and other reservoir products was a contributor to these decreases, the largest component of these decreases was the absence of any PRM system contracts during the current fiscal year. Last year, the Statoil PRM order contributed revenues of $6.7 million and $61.7 million for the three months and nine months ended June 30, 2014, respectively. Discussions are continuing with potential customers for future PRM systems and we believe that our vast leadership, experience, and past success in PRM technology for over a decade keep us well positioned to secure future PRM contracts.”

“Our non-seismic businesses continued down the path of improved performance. Third quarter revenues were $6.1 million, a sequential increase of 21% from the second quarter, and an increase of $0.9 million or 17% from last year. For the nine months ended June 30, 2015, revenues and operating income for our non-seismic businesses were $16.5 million and $2.3 million, respectively, up 4% and 29% from the same period last year.”

“Industry demand for seismic exploration services is at historic low levels, and there is no simple way to forecast when higher levels of product demand may return. To the extent that the current market conditions in the industry remain unchanged, demand for our seismic equipment products will likely continue at these low levels. Until seismic industry activity returns to more conventional norms, our profits will continue to be hard hit by depreciation of unutilized rental equipment and fixed factory overhead costs left unabsorbed by minimal manufacturing operations. Given that seismic exploration and reservoir management are necessary components for a stable and sustainable energy market, endurance through this down cycle and a strong emergence thereafter are our focused objectives. We believe that our strong balance sheet and continued development of industry technology are the key elements that will allow us to achieve these objectives.”

Conference Call Information

Geospace Technologies will host a conference call to review its fiscal year 2015 third quarter financial results on August 7, 2015, at 10:00 a.m. Eastern Time (9 a.m. Central). Participants can access the call at (866) 952-1906 (US) or (785) 424-1825 (International). Please reference the conference ID: GEOSQ315 prior to the start of the conference call. A replay will be available for approximately 60 days and may be accessed through the Investor tab of our website at www.geospace.com.

About Geospace Technologies

Geospace Technologies Corporation designs and manufactures instruments and equipment used by the oil and gas industry to acquire seismic data in order to locate, characterize and monitor hydrocarbon producing reservoirs. The company also designs and manufactures non-seismic products, including industrial products, offshore cables, thermal printing equipment and film.

Forward Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included herein including statements regarding potential future products and markets, our potential future revenues, future financial position, business strategy, future expectations and estimates and other plans and objectives for future operations, are forward-looking statements. We believe our forward-looking statements are reasonable. However, they are based on certain assumptions about our industry and our business that may in the future prove to be inaccurate. Important factors that could cause actual results to differ materially from our expectations include the level of seismic exploration worldwide, which is influenced primarily by prevailing prices for oil and gas, the extent to which our new products are accepted in the market, the availability of competitive products that may be more technologically advanced or otherwise preferable to our products, tensions in the Middle East and other factors disclosed under the heading “Risk Factors” and elsewhere in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which are on file with the Securities and Exchange Commission. Further, all written and verbal forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such factors. We assume no obligation to revise or update any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future developments or otherwise.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150806006468/en/

Geospace Technologies
Walter R. Wheeler, 713.986.4444
President and CEO

Source: Geospace Technologies

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