Geospace Technologies Corporation

Welcome to the Geospace Technologies first quarter 2025 earnings conference call. Hosting the call today from Geospace is Mr. Rich Kelly, President and Chief Executive Officer. He is joined by Mr. Robert Kurta, the company's Chief Financial Officer. 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 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 0. It is now my pleasure to turn the floor over to Rich Kelly. Sir, you may begin.

Good morning, and welcome to Geospace Technologies conference call for the first quarter of fiscal year 2025. As stated, I am Rich Kelly, the company's chief executive officer and president. I am joined by Robert Kurta, the company's chief financial officer. In our prepared remarks, I will first provide an overview of the first quarter, and Robert will then follow up with more in-depth commentary on our financial performance as well as an overview of our recast financials under our new segment realignment. 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 in 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 risk 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 geospace.com website which i invite everyone to browse through and learn more about geospace our subsidiaries and our products note that today's recorded information 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 period ended december 31 2024. our first fiscal quarter for 2025. We are pleased to begin the fiscal year with a strong quarter, yielding net income for our shareholders. For the first quarter, we reported revenue of $37.2 million and net income of $8.4 million, or 65 cents per diluted share. These results show that our focus on driving profitability through strategic decisions continues to generate positive financial performance. This earnings release marks the first time we are reporting financial information since the announcement of our business segment realignment in September of 2024. We updated and reorganized our business segments to better reflect the areas where our technology-driven solutions should produce improved results. As a reminder, our new business segments are Smart Water, energy solutions, and intelligent industrial. In our smart water segment, we reported revenue of $7.3 million for the quarter, an increase from a year-ago period. This is a positive indicator given that historically, the first quarter of fiscal year shows lesser revenue than other quarters due to both seasonality and government budget cycles. we see significant potential in the municipal and multifamily marketplace for our water management solutions. We intend to grow both organically and through potential acquisition to realize our long-term vision for this segment. In our energy solutions segment, we reported revenue of $24.3 million for the quarter. It is important to view this decrease in context to the same period a year ago. Our quarter of fiscal year 2024 included a large $30 million sale of our Mariner shallow water ocean bottom nodes. This quarter, we were pleased to secure a $17 million OBX marine wireless product sale. Our intelligent industrial segment revenue totaled $5.6 million for the quarter. This compared with $5.8 million from the same period a year ago, a decrease of 4%. which we attribute to lower demand in the quarter for our imaging products. I will now turn the call over to Robert to provide more financial detail on our first quarter performance.

Thanks, Rich. 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 first quarter ended December 31st, 2024, we reported revenue at $37.2 million compared to last year's revenue of $50 million. Net income for the quarter was $8.4 million or $0.65 per diluted share compared to the first quarter of last year's net income of $12.7 million or $0.94 per diluted share. Revenue from our smart water segment totaled $7.3 million for the three months ended December 31st, 2024. This compares to $4.2 million in revenue for the same year-ago period, an increase of 72%. The increase in revenue is due to higher demand for the company's Hydrocon cable and connector products. The energy solution segment revenue totaled $24.3 million for the three months ended December 31st, 2024. This compares to $39.9 million in revenue for the first quarter of fiscal year 24, a decrease of 39%. Revenue for the three months into December 31, 2024 included a $17 million OBX marine wireless product sale from our rental fleet. However, in comparison, revenue for the first quarter of the prior year included a $30 million sale of our marine shallow water ocean bottom nodes. Additionally, the reduction in revenue for the first quarter of fiscal year 2025 was also due to lower utilization of the OBX rental fleet. Revenue from our intelligent industrial segment totaled $5.6 million for the three-month period into December 31, 2024. This compares with $5.8 million from the same year-ago period, a decrease of 4%. The decrease in revenue for the three months ended December 31, 2024, was primarily due to lower demand for our emerging imaging products. This decrease was partially offset by an increase in demand for our industrial sensor products. The first quarter of fiscal year 2025 operating expenses were $12.3 million. This is an increase of 31% compared to $9.4 million for the first three months of fiscal year 2024. The increase is due to higher personnel related costs, including wages, benefits, severance, recruiting fees, and bonus. Additionally, during our first quarter, we experienced higher agent commissions due to increased revenue from our smart water segment and higher R&D related project expenditures. Fiscal year 2025 cash investments into property, plant, and equipment are $3.2 million, and cash investments into our rental fleet is $400,000. We expect fiscal year 2025 investments in property, plant, and equipment to be as much as $6 million. Our balance sheet at the end of the first quarter remains strong and debt-free with $22 million of cash and short-term investments. and trade and financing receivables of 41 million. Additionally, we have borrowing availability of 12 million under our bank credit agreement. Thus, as of December 31st, our total liquidity was 34 million. Lastly, we own numerous real estate holdings in Houston and around the world that are free and clear without any leverage. That concludes my discussion, and I'll turn the call back to Rich. Thank you, Robert.