Geospace Technologies Corporation

Welcome to the Geospace Technologies Third Quarter 2021 Earnings Conference Call. Hosting your call today from Geospace is Mr. Rick Wheeler, President and Chief Executive Officer. He is joined by Robert Curta, the company's Chief Financial Officer, and Mark Tinker, CEO of Geospace Subsidiary Quantum Technology Sciences. 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. 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 the pound key. We ask that you please pick up your handset to allow for optimal sound quality. Lastly, if you should require operator assistance, please press star 0. It is now my pleasure to turn the floor over to Rick Wheeler. Sir, you may begin.

Thank you, Brittany. Good morning, and welcome to Geospace Technology's conference call for the third quarter of our 2021 fiscal year. Again, I'm Rick Wheeler, the company's president and chief executive officer, and I'm joined by Robert Curda, the company's chief financial officer. Also, Mark Tinker, Dr. Mark Tinker, CEO of our quantum technology sciences subsidiary, should be able to join us a little later on in the call. I'll first give an overview of the third quarter, and Robert will follow with in-depth commentary on our financial performance. After a few last remarks, we'll open the line for questions that Robert, Mark, and I can hopefully answer. Some of today's statements may be considered forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. This includes comments about product markets, revenue recognition, planned operations, and capital expenditures. Such statements are based on our present awareness, while actual outcomes are affected by factors and uncertainties we cannot predict or control. Both known and unknown risks can lead to differing performance or results from what we say or imply today. These risks and uncertainties included those discussed in our SEC form 10-K and 10-Q filings. As a convenience, we will link a recording of this call on the investor relations page of our geospace.com website. I encourage everyone to visit and browse the site to learn more about GeoSpace and its products and our subsidiaries. Note that the information discussed and recorded in this morning's call is time sensitive and may not be accurate at the time one listens to the replay. After the markets closed yesterday, we released our financial results for the third quarter of fiscal year 2021, which ended June 30th of 2021. As mentioned, with the world's aspirations focused on a global wide recovery from the COVID-19 pandemic, it was encouraging to see that revenue in our third fiscal quarter slightly exceeded that of last year's third quarter. It was even more encouraging that combined revenue for the first nine months of fiscal year 2021 reflected an increase of almost 14% over the same period last year. These increases occurred despite the significant reduction in both periods of revenue received from rentals of our OBX marine nodal recording systems. As we've previously reported in our last call, certain follow-on surveys that intended to utilize our OBX systems were delayed or canceled due to COVID-19 restrictions and lockdowns which left these systems underutilized. It's noteworthy, however, that rental revenue in this third quarter more than doubled in comparison to the preceding quarter. This provides some indication of OBX demand improving as new projects go forward. In opposition to the lower revenue from our oil and gas market segment, revenue from our adjacent market segment experienced major year-over-year increases for both the three- and nine-month periods into June 30, 2021. The respective increases over the last year of 84% and 30% can be attributed in both periods to a variety of factors. These include stronger sales of our smart water meter cables and connectors, higher utilization of our contract manufacturing services, and greater demand for our graphic imaging products. When recovery from the COVID-19 pandemic gains additional momentum, we anticipate the demand for these products will continue to trend upward. We believe the steady overall growth exhibited in our adjacent market segment offers tangible evidence that our deep-rooted expertise in innovative engineering and manufacturing continues to bring ever-increasing technological value to an ever-expanding market. Along these lines, our recently announced acquisition of Aquana LLC further demonstrates our strong commitment to deliver state-of-the-art IoT solutions to the diversified yet highly technologically aligned industry of smart city initiatives. The cloud-based controls and data management provided by the Aquana platform and its products help both water utilities and property managers conserve critical water resources and reduce their costs. Our quantum technology science subsidiary, which makes up our emerging market segment, contributed 1.1 million to third quarter revenue, bringing the segment's nine-month year-to-date total to $10 million. The majority of revenue for both periods is the result of completion efforts on the contract awarded to Quantum by the Department of Homeland Security in April of 2020. The contract called for providing the U.S. Border Patrol with a highly effective border and perimeter security solution that utilizes our sophisticated sensor-based systems in conjunction with Quantum's ultra-advanced analytics. Taken together, our adjacent and emerging market segments combined to generate 45% of total revenue in both the three- and nine-month periods into June 30, 2021. Now, just before I turn the call over to Robert, let me remind everyone that in an effort to return meaningful value to our shareholders, we announced a stock repurchase plan in November of 2020. I'm pleased to report that as of August 4th, 2021, we had purchased a total of 553,588 shares of our common stock for approximately $4.7 billion since that program's inception. The company has also authorized an additional $2.5 million for this buyback program. Now with that, I'll turn the call over to Robert for more financial detail.

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. In yesterday's press release for our third quarter into June 30th, 2021, we reported revenue of $23.1 million compared to last year's revenue of $22.7 million. The net loss for the quarter was $787,000, or $0.06 per diluted share, compared to last year's.